Which Divorced Parent Files the FAFSA?

The Free Application for Federal Student Aid (FAFSA) helps students secure financial assistance for higher education, including federal grants, scholarships, work-study programs, and loans. For students with divorced or separated parents, determining which parent’s financial information to report can be complex. This article clarifies the FAFSA rules for these family structures.

Identifying the FAFSA Parent

Determining which parent should complete the FAFSA for a student with divorced or separated parents relies on a federal methodology that differs from legal custody arrangements or tax filing statuses. The primary rule identifies the FAFSA parent as the one who provided more than 50% of the student’s financial support during the 12 months immediately preceding the FAFSA filing date. This financial support includes payments for housing, food, clothing, medical care, and educational expenses.

If neither parent provided more than 50% of the student’s financial support, or if support was roughly equal, the FAFSA then looks to where the student lived for the majority of the 12-month period before filing. The parent with whom the student lived for the greater number of nights during that year is considered the FAFSA parent. This is often referred to as the “custodial parent” for FAFSA purposes, even if that term doesn’t align with legal custody decrees.

This determination is based on the student’s physical residence, not which parent has legal custody or claims the child as a dependent for income tax purposes. For example, a student might legally be in the custody of one parent but physically reside more often with the other. In such cases, the parent with whom the student lived most of the time completes the FAFSA.

For parents who were never married but are separated, the same rules apply. If the student lived an equal amount of time with both parents, and neither provided significantly more financial support, the FAFSA instructs that the parent who provided more overall financial support to the student should complete the application.

Financial Information from the FAFSA Parent Household

Once the FAFSA parent is identified, the application requires income and asset information from that parent and their current spouse, if they have remarried. This financial data provides a comprehensive picture of the household’s ability to contribute to the student’s education costs. The information reported reflects the financial situation from the “prior-prior” tax year, meaning the tax year two years before the academic year for which the student is applying.

For income, the FAFSA requires figures such as Adjusted Gross Income (AGI) from federal tax returns, which can be retrieved directly from the Internal Revenue Service (IRS) using the FAFSA’s IRS Data Retrieval Tool (DRT). Beyond AGI, untaxed income sources must also be reported. These include contributions to tax-deferred pension or retirement plans, interest on tax-exempt bonds, and certain housing allowances.

Regarding assets, the FAFSA collects information on cash, savings, and checking account balances as of the day the FAFSA is filed. It also requires the net worth of investments, which includes stocks, bonds, mutual funds, and real estate other than the family’s primary residence. The value of qualified retirement accounts, such as 401(k)s, 403(b)s, and IRAs, is excluded from reported assets.

If the identified FAFSA parent has remarried, the income and assets of their new spouse, the stepparent, must be included on the FAFSA. This inclusion is mandatory regardless of any prenuptial agreements or whether the stepparent contributes financially to the student’s support. The FAFSA considers the stepparent an integral part of the FAFSA parent’s household, and their financial data is combined with the FAFSA parent’s information to determine eligibility for financial aid.

Including Specific Income and Asset Considerations

Certain types of income and financial arrangements common in divorced households, such as child support and alimony, have reporting requirements on the FAFSA. Understanding how these are treated is important for accurate application submission.

Child support received by the identified FAFSA parent, or any other member of their household, must be reported on the FAFSA as untaxed income. This includes any payments made for the support of children, regardless of whether they are the student applying for aid. For example, if the FAFSA parent receives $10,000 annually in child support for the student and another $5,000 for a younger sibling, the full $15,000 must be reported.

Conversely, child support paid by the FAFSA parent is not directly reported as income on the FAFSA. However, the amount of child support paid can be factored into the need analysis calculation by reducing the available income from which the Expected Family Contribution (EFC) is determined. This adjustment acknowledges the financial obligations of the parent paying support.

Alimony or spousal support received by the identified FAFSA parent is reported differently based on the date of the divorce or separation agreement. For agreements executed on or before December 31, 2018, alimony received is considered taxable income and included in the Adjusted Gross Income (AGI). For agreements executed after December 31, 2018, alimony received is not taxable income and would not be included in the AGI, but may still need to be reported as untaxed income on the FAFSA. Alimony paid by the FAFSA parent is not deductible for FAFSA purposes, irrespective of its tax treatment on their federal income tax return.