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How do noncustodial parents affect financial aid?

December 02, 2018

The financial aid process is tricky. Applications for aid become even more convoluted as family structures look less like a stereotypical nuclear family. What happens when your family life isn’t quite so cookie cutter? Whether you’re a divorced parent or a student with no custodial parents at all, we have you covered.


All of the topics discussed in this article are targeted to dependent students. If you believe you qualify as an independent student, review the qualification here and fill out the application.


Noncustodial parents and the FAFSA


As you’ve likely seen, the FAFSA requires a lot of information from the student and parents. If both parents live together and are willing to provide the required information, the application is easy. If not, it gets a bit more complicated. Let’s tackle the FAFSA for your specific needs.


If parents are DIVORCED OR SEPARATED AND DON’T LIVE TOGETHER, FAFSA only requires information from the custodial parent. According to the FAFSA website, the only parent who needs to do any reporting is the parent with “whom you lived more during the past 12 months.” If the divide is equal, FAFSA will require the information from the parent who provided the most financial support to the student.


If the CUSTODIAL PARENT HAS REMARRIED, the stepparent is required to report their financials as well. Note that this only applies to the financials and not education level. Education questions must be answered about the biological or adoptive parents.


If you are a STUDENT WITH NO CUSTODIAL PARENTS, you have limited options. FAFSA requires that the application is filled out by your legal parent(s), which is defined as your biological and/or adoptive parents or parents listed on your birth certificate. Grandparents, foster parents, legal guardians, older brothers or sisters, uncles/aunts, or widowed step-parents who have not adopted you, cannot fill out your FAFSA form as the parent.


If you are unable to get your non-custodial parents’ financial information, best practice is to go directly to your financial aid office and inform them of the situation. Circumstances recognized by the FAFSA are:


  • Your parents are incarcerated.

  • You have left home due to an abusive family environment.

  • You do not know where your parents are and are unable to contact them (and you have not been adopted).

  • You are older than 21 but not yet 24, are unaccompanied, and are either homeless or self-supporting and at risk of being homeless.


If you can claim any of the circumstances in the bullets above, you will be able to mark that you are unable to provide information about your parents, specify the reason and still submit the FAFSA. Now you submitted the FAFSA, but it’s not being fully processed. Immediately contact your financial aid office and inform them of the situation. Gather as much written evidence of your claim as possible to defend your case. From this information, the office will determine how to handle your financial need. Their decision will be final and cannot be appealed to the U.S. Department of State.


Noncustodial parents and the CSS Profile


Many colleges and universities use the CSS Profile in their financial aid process. For a list of all participating institutions, go here. As with the FAFSA, the CSS Profile becomes more complicated with separated families. Here are tips for navigating the Profile.


Unlike the FAFSA, the amount of information required on your application will depend on each institution’s expectations. Where Berry College in Georgia only wants the information from the custodial parent, Bates College in Maine requires the information of both biological parents regardless of DIVORCE OR SEPARATION. The parents will create separate profiles and complete separate application. For a full list of noncustodial parent expectations, review column six of participating institutions.


If the CUSTODIAL PARENT HAS REMARRIED, the stepparent is required to report their information as well.


If one or both of the PARENTS ARE UNABLE TO TO COMPLETE THE CSS PROFILE, the student will need to complete a CSS Profile Waiver for each parent. If you are submitting a waiver, contact the institution immediately, inform them of the situation and ensure you follow their additional processes (if any). Waiver requests that are likely to be considered are:


  • Documented abuse situations involving you and your noncustodial parent.  

  • Legal orders that limit the noncustodial parent's contact with you.  

  • No contact or support ever received from the noncustodial parent.


Expect to be asked for written proof such as legal orders, court documents and letters of professionals who have a first-hand account of the situation. Reasons not considered are:


  • Noncustodial parent refuses to complete the CSS Profile.

  • Divorce decree states that the noncustodial parent is not responsible for the student's educational expenses.

Also unlike the FAFSA, LEGAL GUARDIANS set up by the court are expected to complete the CSS Profile as though they are the parent. All parent questions on the application should be completed by the legal guardian.


Noncustodial parents and 529 plans


What happens if a parent has opened a 529 plan for a student and the parents got separated? We know that too!


For divorced or separated parents, only the custodial parent must submit their information in the FAFSA. Go here for a reminder on how the FAFSA defines “custodial.”  This includes the 529 plan. Your 529 plan should only be reported as an asset if it belongs to the custodial parent or the student. If the 529 plan is in the name of the non-custodial parent, it should not be reported.


It is important to be aware that if you distribute funds from the 529 plan to the student, it will be reported as untaxed income. This will have a negative impact on the need-based aid the student will receive for the following year. The best workaround for this is to only use the funds in the 529 plan in the last year of college (as there will be no aid package the following year).


For the CSS Profile, the reporting requirements vary from school to school and “parents” has a different definition than in the FAFSA. Some colleges will require the reporting of the non-custodial parent -- others will not. Either way, most colleges set their own guidelines for need-based aid, so the effect of your 529 plan will differ at each institution.


Ask questions!


Get the most out of your aid opportunities.


Regardless of your family situation, if have any questions about how your family structure affects your financial aid, you can always contact your school directly, review the FAFSA/CSS Profile websites and, of course, talk to the experts at Edmit.