College Financial 101 for Divorced Parents
By Guest Contributor, Stephanie Mauro
College financing is hard for everyone, but there are some special points to consider when the students parents are divorced.
When it comes to divorced families the financial aid process can be very confusing and overwhelming. In the following paragraphs I will explain in detail how the financial aid system works for divorced families, specifically.
Ninety five percent of all colleges in America take the FAFSA (free application for federal student aid). After filing the FAFSA, a family is provided with an expected family contribution (EFC), an index number that colleges use to determine how much financial aid a family is eligible to receive. The EFC is the minimum a family will pay for college based on income and assets of both student and parent.
When it comes to colleges that only take that the FAFSA, the parent who has the student more than 50% of the time is the parent who will file the FAFSA. It doesn’t matter which parent claimed the student on their taxes in the prior year. If the parent that filed the FAFSA is remarried, their spouse’s income and assets will count towards financial aid eligibility as well.
The parent that the student lives with less than 50% of the time does not have to provide their financial information to colleges that only require the FAFSA.
There are about 400 colleges that require the CSS profile (college scholarship service) form (in addition to the FAFSA). They are the Ivies and colleges like Syracuse, Ithaca, Northeastern, Boston College and Boston University and others.
The CSS profile form captures the equity in your house(s), sibling(s) assets and a parent’s business(s). The FAFSA does not count the equity in your house, sibling assets nor businesses with less than 100 employees. In addition, the CSS Profile requires the noncustodial parent’s income and assets and, if married, their spouse’s income and assets as well. Therefore, a family’s EFC with colleges that require the CSS could be more than double what it would be under FAFSA only EFC. (Of course, if the non-custodial parent does not have much income or assets and is not married, the EFC will not be adversely affected.)
It is very important that families understand what their EFC is before their students apply to college. Consider it like getting pre-approved for a mortgage for a new home, which by the way, 4 years of college can be as expensive as! Allowing students to fall in love with a college that is not financially feasible is very stressful for the entire family. Financing college must be carefully reviewed before making financial decisions. Students cannot get private loans without a co-signer and the government only provides a fraction of the cost via low interest loans to students.
While this is just an overview, if you have specific questions or would like to discuss your situation in detail, please call me at 845-605-1100 x1 for a no obligation, free consultation.
Stephanie Goldberg-Mauro is the owner and founder of College Planning 101. With almost 10 years of college planning experience, Stephanie has helped hundreds of families to get their students into the “right” college and to save at the “right” price for their budget. Prior to starting College Planning 101, Stephanie was a VP of the Life Division at Frankel & Company in New York City where she worked with the president of the Life and Benefits Division to build and launch an individual asset protection product to complement their health benefits product. Stephanie’s motivation to begin a career in college planning was borne of the realization that today’s college graduates are immediately faced with monthly student loan payments of $600 to $1,000. Given her extensive financial experience and background, Stephanie knew she could help students reduce those payments, and so, College Planning 101 was created. Stephanie’s free seminars have helped thousands of applicants and their families understand the challenges of managing the college application and financial processes. She has personally guided hundreds of families through the complete application / acceptance / financial assistance process. Stephanie attended Berkeley College in White Plains, New York. She has a son, Patrick, and together they enjoy baseball, traveling, fishing and cooking.