Does FAFSA Require Both Parents’ Income if Divorced?

The Free Application for Federal Student Aid (FAFSA) collects financial and demographic information from students and their families. This data determines eligibility for federal student aid, including grants, work-study programs, and low-interest loans. Many states and educational institutions also use FAFSA data to award their own financial aid, including scholarships and institutional grants. The FAFSA helps assess a family’s financial strength and their ability to contribute to college costs, influencing the amount and types of aid a student may receive.

Identifying the FAFSA Custodial Parent

For divorced or separated parents, the FAFSA now requires information from the parent who provided more than 50% of the student’s financial support during the 12 months immediately preceding the FAFSA filing. This shift emphasizes financial contribution over physical residency.

If both parents contributed an equal amount of financial support, or if neither parent provided financial support, the FAFSA instructs the student to report the information for the parent with the greater income and assets. This determination of financial support is based on the student’s judgment, as the Department of Education does not provide specific guidance on how to calculate or measure this support. Note that legal custody or which parent claims the student on their tax returns are not factors in this FAFSA determination.

The FAFSA considers parents to be separated or divorced if they are not living together, even if the separation is informal. However, if divorced or separated parents are still living in the same household, even if informally separated, both parents’ financial information must be included on the FAFSA. The FAFSA application includes a “Parent Wizard” to help students determine which parent should be the contributor based on these new guidelines.

Required Financial Information from the Custodial Parent’s Household

Once the custodial parent is identified, specific financial details from their household must be reported. The FAFSA utilizes “prior-prior year” income, meaning for the 2025-2026 academic year, information from the 2023 tax year will be required. This allows families to use completed tax returns. Income data includes adjusted gross income (AGI) as well as certain untaxed income items.

Reportable untaxed income encompasses elements such as child support received, untaxed distributions from IRA or pension plans, tax-exempt interest income, and foreign income exclusions. However, recent FAFSA simplifications have eliminated the requirement to report some untaxed income, such as contributions to tax-deferred retirement accounts. Applicants are required to provide consent for a direct data exchange with the IRS, allowing automated transfer of tax information.

Beyond income, the FAFSA also requires reporting of certain assets held by the custodial parent’s household. This includes the current balance of cash, savings, and checking accounts, along with the net worth of non-retirement investments. Examples of reportable investments are real estate (excluding the primary residence), rental properties, trust funds, money market accounts, mutual funds, certificates of deposit, stocks, and bonds. Qualified educational savings plans, such as 529 plans and Coverdell Education Savings Accounts, are also counted as parental assets.

If the identified custodial parent has remarried, the income and assets of their current spouse, the stepparent, must also be included on the FAFSA. This applies regardless of any prenuptial agreements or whether the stepparent directly contributes to the student’s expenses, as they are considered part of the custodial household’s financial picture. Assets held in retirement accounts, such as 401(k)s and traditional IRAs, along with the equity in the family’s primary residence, are excluded from FAFSA asset calculations.

Understanding Exclusions from Income Reporting

For divorced or separated parents, the income and assets of the non-custodial parent are not reported for federal student aid calculations. Only the financial information of the parent identified as providing the majority of the student’s financial support, and their current spouse if remarried, is considered.

Child support received by the custodial parent is now considered an asset, which is assessed more favorably in the financial aid formula than income. This can lead to higher aid eligibility for families receiving child support.

Conversely, child support paid by the custodial parent to another household can reduce their available income for FAFSA calculations. This adjustment acknowledges the financial outflow from the household. This distinction between child support received and paid is important for accurately reflecting the custodial parent’s financial standing.

Beyond the non-custodial parent’s finances and specific child support treatments, several other income sources are excluded from FAFSA reporting. These include welfare benefits, food stamps, and earned income tax credits. Additionally, combat pay, workmen’s compensation, and non-education veterans’ benefits are not reported. Financial support received by the student from friends or extended family members, such as distributions from grandparent-owned 529 college savings plans, is also excluded.

Submitting FAFSA Information for Divorced Parents

Completing the FAFSA for divorced parents requires accurate submission. Both the student and the identified contributing parent, along with any stepparent whose financial information is required, must first create a StudentAid.gov account and obtain a Federal Student Aid (FSA) ID. This ID serves as an electronic signature for accessing and completing the online application.

Within the FAFSA, the “Parent Demographics” section asks for the parent’s marital status. For divorced parents not living together, “Divorced” or “Separated” should be selected. If the custodial parent has remarried, “Married or remarried” is the appropriate choice to include stepparent financial information. If divorced parents continue to reside in the same household, they should select “Unmarried and both legal parents living together,” requiring both parents’ financial details.

The “Household Information” section requires reporting the number of individuals supported by the contributing parent’s household. This count includes the student, the parent(s) (and stepparent, if applicable), and any other dependents for whom the household provides more than 50% of their financial support. Most income and tax data is securely transferred directly from the IRS to the FAFSA through the Direct Data Exchange (DDX) once consent is provided, reducing manual entry errors. Additional untaxed income and asset details are entered in designated financial sections.

Accuracy is important throughout the submission process. All FAFSA information should align with official tax documents and financial statements. Inconsistencies can lead to the FAFSA being selected for verification, where the financial aid office requests documentation to confirm data, which may delay aid disbursement. After all sections are completed and electronically signed, the FAFSA is submitted online. The applicant receives a FAFSA Submission Summary, providing a summary of submitted data, the calculated Student Aid Index (SAI), and estimated federal aid eligibility for review.