Filing the Free Application for Federal Student Aid (FAFSA) is a critical step in securing college funding, and for families navigating divorce or separation, the process comes with unique and sometimes complex challenges. New federal guidelines have shifted the focus for divorced parents, making it more important than ever to understand the rules of engagement.
The central question for divorced or separated parents is: Which parent fills out the FAFSA as the “contributor”? The answer is no longer based on who the student lives with most, but purely on financial support. Additionally, the FAFSA’s calculation of your Student Aid Index (SAI) relies on a deep dive into both parents’ financial picture.
We’ve gathered and clarified some of the most pressing and frequently asked questions divorced and separated families have about FAFSA filing to help you move forward with confidence and clarity.
Question: How do we know which parent has contributed more financially to the student, especially in cases where one parent has a higher income but the other has more assets?
Answer: The determination rests on who provided the greater portion of the student’s financial support during the last 12 months. This is a crucial new rule. The parent’s income or assets only serve as a tiebreaker if both parents contributed an exactly equal amount. To get a clear picture of who the primary financial supporter is, it’s wise to use a detailed worksheet to tally up all contributions, from tuition and health insurance to day-to-day costs like cell phone bills and gas.
Question: For FAFSA, if I don’t know what my former spouse makes in income and assets, and I don’t want my former spouse to know what my income is, how do we determine who the primary contributor is?
Answer: While the financial support rule is the official decider, contentious situations require careful strategy. In a true deadlock, you must default to the parent who is genuinely the greater financial supporter. If you are extremely close and unable to coordinate, some consultants suggest the parent who is less financially well-off should file. Historically, applicants that get pulled for FAFSA verification have been more common for those seeking the maximum federal aid (like Pell Grants). Be prepared to state your case that you provided the most financial support if you are pulled for verification.
Question: What if mom pays more because she’s receiving child support from dad? Then who is the main contributor?
Answer: This is a clear-cut FAFSA rule: The parent who receives child support must now report it as an asset on the FAFSA. Since the child support is an asset received by the parent on behalf of the child, this officially counts toward making that parent the financial contributor to the student. Much more favorable to be assessed as an asset at 5.64%, than to be assessed as income at as hight as 47%.
Question: Is parent income protected at all, and how does family size impact that?
Answer: Yes, the FAFSA employs an Income Protection Allowance (IPA). This acts like a baseline living expense allowance, shielding a certain amount of your income from being counted toward the SAI. The amount of this protected allowance is influenced by two major factors: the age of the oldest parent and the number of dependents in the household. A larger, older household will generally have a higher IPA, protecting more income.
Question: If both parents own a home, so separate homes, does the FAFSA look at the equity in both homes?
Answer: The FAFSA generally does not count the net worth of the primary residence for the parent who is completing the application. However, any second home or other real estate—such as a former marital home, vacation property, or a rental home—is considered an asset, and the net worth (value minus debt) of that property will be included in the financial aid calculation. This applies to the contributor parent’s assets, and any properties owned by the non-contributor parent are not included on the FAFSA. Note: Some individual college aid forms (like the CSS Profile) do consider home equity.
Question: If I own the student’s 529 plan, but the other parent has the higher income, does the 529 plan not get disclosed since the other parent is filling out the FAFSA?
Answer: This is one of those “wrinkles” to be aware of! Yes, if the parent who is determined to be the FAFSA contributor does not own the 529 plan, that asset is not disclosed on the FAFSA. The only parent/stepparent assets reported are those of the contributor. This underscores the financial importance of carefully determining the contributor.
Question: My dad put my name on his rental house in case he passes away, but he still has full responsibility for it. Do I have to list this as an asset even though it’s not really mine?
Answer: This can be a costly mistake. If the student is on the title of the property, it must be listed as a student asset on the FAFSA. Student assets are assessed at a significantly higher rate (up to 20%) than parent assets (up to 5.64%), which can severely reduce aid eligibility. We strongly recommend that the parent carefully weigh the tax and estate planning implications against the loss of potential financial aid before placing any substantial asset in the student’s name.
Final Thoughts
Navigating the FAFSA as a divorced parent is less about legal custody and more about strategic financial planning focused on the 12-month financial support rule. The complexities around assets like 529 plans and real estate can make a substantial difference in your final Student Aid Index (SAI) and, consequently, the amount of aid you receive.
Your next action step should be to use a detailed financial support tracker to document every single dollar contributed to your student in the last 12 months. This factual tally is your foundation for confidently designating the correct parent contributor.
If you have any further questions about how to track financial support or have any other questions about how divorced families should file for financial aid, check out the highlights from my webinar, “How Divorced Families Pay for College”.
Still have questions after watching? No sweat! Schedule a complimentary 30-minute call with me so we can discuss your unique situation one-on-one
