You should plan for your kid’s college when you get divorced

Another part of college planning impacted by divorce is financial aid eligibility. If your children are already in college or are within two years of attending, you’ll want to make sure you understand a least the basics of how aid is calculated. Here are some things to consider.

1. Who is the custodial parent?

On the Free Application for Federal Student Aid, or FAFSA, the paperwork that must be filed to get federal aid, only one parent’s information is required, said Mark Kantrowitz, financial aid expert and publisher of SavingForCollege.com. That parent is called the custodial parent, he said, and should not be confused with the parent who actually has legal custody.

The custodial parent is whom the child lived with the most over the last year, or whichever parent provides more support. If you are separating, divorcing or divorced, it is in your best interest to know ahead of time who will be considered the custodial parent – their income will be the one used to determine financial aid eligibility.

“All it takes is one day’s difference,” said Kantrowitz. “You have control over which parent is going to be the custodial parent.”

The College Scholarship Service or CSS Profile, used by some schools to determine financial aid and scholarships, requires information from both parents, said Kantrowitz.

2. Who owns the 529?

Once you’ve determined who is the custodial parent, another thing to consider is who owns any 529 college savings plans, Kantrowitz said. If a plan is owned by anyone other than the custodial parent or the child, it is counted differently and can reduce financial aid eligibility by as much as half, said Kantrwitz.

“It’s best to make sure you have all your ducks lined up in a row,” he said.

3. College administrators have the power.

Remember that you cannot game the system, and if you switch which person is listed as the custodial and noncustodial parent, a college is within its rights to ask for your divorce decree. Financial aid administrators have many tricks to figure out if parents are lying, Kantrowitz said.

“There’s no appeal beyond the financial aid administrator,” said Kantrowitz.

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