How a Divorce Affects Paying for College
Whether you’re personally getting a divorce or your parents are, chances are this will affect your financial aid status. A divorce can also affect your repayment of student loans after graduation. Here’s an overview of how a divorce affects the way you pay for college—in terms of financial eligibility as well as repayment.
If You’re Divorced Yourself
If you’re divorced, whether your ex-spouse helps pay for student loans is widely variable. It depends on a series of factors—including when you enrolled in school, your state’s common property laws, and your individual divorce settlement.
If you graduated from college before the divorce, your ex may be required by state law to pay half of your student loans after the divorce. If you graduated after the divorce, however, the reasoning in many previous cases is that the ex-spouse did not get a chance to benefit from your additional earning potential after earning the degree—so he or she may not be judged responsible for the student loan debt. In general, your ex-spouse may indeed be required to pay for some of your student loans—or not, depending on prior case records and your individual situation.
If you enroll in college after the divorce, private and federal lenders will not take
into account your ex-spouse’s credit history and your ex will not be expected to
help with the loan.
Whether you’re personally getting a divorce or your parents are, chances are this will affect your financial aid status.
If Your Parents are Divorced
If you’re still a dependent of your parents, the federal government considers the assets and income of only one parent—the custodial parent—when determining financial aid eligibility. For financial aid purposes, the custodial parent is the one you’ve lived with the most during the past 12 months, ending on the date of the FAFSA application.
If you lived with both parents equally, the one who supports you the most financially, usually the one who claims you as a dependent on tax returns, is the one who fills out the FAFSA. Interestingly, the custodial parent—or the one who provides the most financial support—isn’t necessarily the one who has legal custody.
If it’s not clear which parent you lived with most often or which one provides more financial support, your college’s financial aid administrator will probably choose the parent—and this decision is often based on which one makes more.
On the FAFSA, the government doesn’t include the non-custodial parent’s income and assets when determining financial aid eligibility. However, it does consider child support payments received by the parent filling out the FAFSA. And many private colleges do consider the non-custodial parent’s income—they may ask this parent to fill out a supplemental financial aid form. However, this affects a student’s eligibility only for school-based financial aid, not Federal or state financial aid.
Even though the federal government considers the assets of only one parent, some states require both divorced parents to help pay for college—or allow courts to compel a non-custodial parent to pay for it on a case-by-case basis. When this happens, the noncustodial parent is usually required to pay half of college costs—which may include books, extracurricular expenses, and a cash allowance—as well as tuition. Other states, however, prevent courts from ordering a non-custodial parent to help pay for college, unless enforcing a previous agreement between the two parents.
If your parents have a written agreement detailing the terms of each parent’s college support, the court will not order one parent to pay more than agreed. This type of agreement usually specifies who is responsible for what percentage of college expenses, the number of semesters of support required for each parent, limits on annual payments, and so on.
At first glance, it appears as though children of divorced parents get a better deal on student loans than those with intact families, since the FAFSA only considers the income of one parent. But that’s only if the custodial parent doesn’t remarry—if they do, the new spouse’s income and assets are also included on the FAFSA. The best route is often to work out a written agreement detailing who is responsible for what amount of college expenses—rather than leaving it to the courts.
Divorce’s Impact on Your Children’s College Costs
FinAid: Divorce & Financial Aid
SimpleTuition.com: If Parents are Divorced, Who Should Serve as the Custodial Parent?
DivorceSource: Division of Student Loans in Divorce Cases
AskLadyEsq: Who Pays for Student Loan Debts at Divorce?
WomansDivorce.com: Handling Debts in Divorce