Remember Your Child’s College Costs and the FAFSA in Divorce Mediation

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Divorcing parents often forget to decide how they’ll pay for a child’s higher education. If they separate while their child is still playing hopscotch, their education cost concerns might revolve around extracurriculars. They’re barely thinking about high school, let alone college.

They can’t know for sure what their finances will look like in the far-off future. But along with comprehensive financial planning (like who will claim an exemption for the child on their taxes), divorcing parents can at least have an idea of who will be involved with a college financial aid application.

In 2024, U.S. students and parents who fill out the FAFSA application will notice some changes. Stay current on how this works so divorce settlements are using the newest information.

Planning ahead for college tuition bills

Parents may plan to split the costs in the event that their child does go to college. For example, they can specify a maximum amount they’ll each pay over a set period of time.

If they reach agreement at the time of their divorce on how they will (or won’t) pay for college, then, even if college is more than a decade away, they’ve made strides to avoid this uncertainty down the road.

A written agreement about paying for college may be enforceable, even if the court wouldn’t otherwise try to tell parents what to do on this topic. This is true when parents tell an Alabama court how they’ll pay for college, for example.

Most college students need financial aid

Even if both parents plan to contribute toward their child’s education, the student may still need financial aid.

Therefore, parents should anticipate the likely financial aid process and plan ahead as much as possible.

In the United States, each year a student is enrolled in college and seeks federal financial aid, they and their parents must fill out the government’s Free Application for Federal Student Aid (FAFSA). Almost all college students do this — there are millions of applications per year. The FAFSA is an online process that can automatically pull IRS data into the form.

Even if a student doesn’t anticipate applying for federal aid, they may fill out the FAFSA for other reasons. For example, schools that grant their own scholarships may ask for it.

Recent FAFSA changes affect divorced parents 

Some important changes affect applications beginning with the 2024–2025 school year. 

Parents who are serious about financial planning should consider these points. Mediators can help by reminding them.

1. Be aware of which parent pays more to support the child financially, especially as college approaches.

When parents are divorced, the FAFSA asks for a “parent of record.” This is the parent who paid the most to support the child, considering day-to-day expenses as well as any child support payments, during the year before the FAFSA is filed. (The parent of record is no longer the parent who spends the most time with the child.)

2. Understand how support payments can factor into the financial aid calculation.

If the parent of record received some child support from the other parent during the relevant tax year, the child support they received is treated on the FAFSA as their asset. (It’s no longer treated as their income.)

3. Anticipate how a new marriage might affect their financial profile.

If the parent of record has remarried, the FAFSA also considers their new spouse’s tax information. 

4. Promise to be available to fill out the FAFSA when the time comes.

Each person — student, parent of record, and parent of record’s new spouse (if the stepparent filed taxes separately) — has to participate in the application process by completing a section online.

5. Use the most updated financial terminology to avoid confusion down the line.

For example, when negotiating a divorce settlement, refer to the personalized result of the FAFSA calculation as the Student Aid Index. (It’s no longer called the Expected Family Contribution.)

For parents who divorce shortly before filling out the FAFSA

If a parent’s marital status has changed since they filed taxes, they may have to copy and paste their IRS data into the FAFSA, as the FAFSA may not retrieve it automatically.

Specifically: The FAFSA uses parents’ 2022 tax information for the 2024–2025 school year. If a parent filed 2022 taxes while married but is divorced by the time the student applies for Fall 2024 or Spring 2025 financial aid, the parent of record may have to manually enter their tax information.

It’s just an extra step for which a parent should be prepared to make sure the application goes smoothly.

Child support probably won’t address college tuition

Child support judgments usually don’t press the issue of college tuition, as the child will be nearing adulthood (and thus aging out of child support) when they’re ready for college. It’ll be up to the adult child whether they want to go to college at all, what they’d like to study, and whether they put in the effort to graduate. Plus, tuition costs vary widely, so it’s hard for a court to attempt to tell parents what to do.

Fortunately, parents — ideally together, in mediation — can take the initiative to decide what they’ll do.