You’re divorced or preparing to divorce. Your child is preparing to go college. Money is inevitably on your mind. Your divorce will affect your child’s chances of receiving college financial aid, but whether your split works in your favor depends on many factors, including the school your child chooses, the type of financial aid forms that school requires, and who the custodial parent is. 

Here are some of the basics of college financial aid that every divorced parent needs to know:

• FAFSA is your friend. Schools that use the Free Application for Federal Financial Aid (FAFSA) ask only about the income of the custodial parent – meaning, the parent who a child lives with for more than half of the year. That parent’s income would be included on the aid application, but not the ex-spouse. If you’re not exactly rolling in it after your divorce, this need can work to your advantage where college financial aid is concerned.
• Private schools have different rules. Private institutions typically ask for more information about finances, using other financial aid documents like the CSS/Financial Aid PROFILE that offers nonfederal financial aid. Many of these schools (but not all of them) will want to know about the finances of both parents, custodial and non-custodial. There are some PROFILE schools that don’t ask about the income of the non-custodial parent, and this can sometimes enable their child to acquire more financial aid. School choice matters for many reasons, and financial aid is certainly one of them.
• Look for schools that offer need-based aid. There are close to 50 colleges and universities in the United States that don’t award merit aid to wealthy students – they only dispense need-based financial aid. Depending on your financial situation, you have to determine if it’s better for your child to search for colleges that just use the FAFSA or if they should pursue PROFILE institutions that give merit scholarships to wealthy students.
• Your home equity might or might not matter. FAFSA does not ask about home ownership. PROFILE schools do ask about home ownership and equity. If your divorce left you house-rich and cash-poor, you’ll be happy to know that your home equity is a non-issue for most state and private colleges and universities. There are, however, about 260 schools, mostly all private (the prestigious ones you’re thinking of), that are interested in the value of your house and treat your home equity differently.

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There is no guarantee that your talented young athlete will land a full ride to the Division I school of their choice. And there is no guarantee that your valedictorian is a shoe-in for a full ride to the Ivy League. Student loans exist to help students make it to college and divorced parents may believe this will be their financial salvation, but going into massive debt – or allowing your child to accrue this kind of debt – is misguided. Your child’s educational expenses – no matter what age or grade they are in – should be addressed during the divorce process and included in your divorce settlement along with other child support issues.

Michigan courts may consider a variety of factors when determining how college expense support fits into your Michigan divorce settlement, such as the income, savings, and investments of both parents, the standard of living the child would have enjoyed had the marriage not ended in divorce, and the availability of financial aid. Your divorce attorney can guide you best on these matters.

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College requires planning and, even if you’re in the middle of a divorce, must be considered and discussed during your divorce. If you’re divorced and struggling with reconciling how college expenses fit in based on your divorce settlement, contact a divorce lawyer to review your settlement. Your child’s eligibility for financial aid can be impacted by a great number of factors, including whether you or your ex remarries. It’s always wise to directly contact the individual schools your child is interested in applying to so that you can understand their specific requirements for financial aid eligibility and avoid being in a less-than-ideal financial situation down the road.

Contact Femminineo Attorneys in Mt. Clemens, MI, to schedule your no-cost initial interview and discuss all financial aspects of your divorce and how they will impact you and your children.

More about divorce and finances:

How a Michigan divorce can impact your retirement
The tax implications of your Michigan divorce
When your divorce affects your professional life