Peaceful Divorce

People going through divorce are getting smarter. They’re looking for ways to work together for the good of the family - in their parenting arrangements, financial settlements and in the education of their children. Sending a child to college is one of the most significant financial burdens divorced parents can face today, but there are choices that you can make together which will maximize the financial aid available to your children.

The Free Application for Federal Student Aid (FAFSA) is the gateway to all federal student aid.
This past September, I attended a workshop on the subject at the annual conference of the Association of Divorce Financial Planners. It was presented by Amy Whitlatch and Kevin Worthley, both of whom are Certified Financial Planners and Certified Divorce Financial Analysts, like myself.

As I listened, I couldn’t help but wish I had these two around as I was going through my own divorce and planning for my children’s education. So I’ll do you that favor and point out some things you might want to ask yourself:

  • What is the definition of Expected Family Contribution or EFC?
  • What methods are used when calculating the EFC?
  • What is the criteria?
  • How does the FAFSA define a parent’s income?
  • What assets are excluded from the parents?

If you would like more detailed steps to look at, please contact me and I’ll be more than happy to email a list of the steps.

Timing is important.

Let’s take a hypothetical case of a high school senior who is set to attend college in Fall of 2013. If his or her parents’ divorce is not finalized until January 2013, then it is the joint tax return of 2012 which will be the basis of the child’s financial aid package. Using the same example but with the divorce having been finalized in 2012 instead of 2013, the child’s financial aid package would be based solely on the income of the custodial parent.

The criteria for determining the custodial parent is literally defined as the home the child “slept most nights in.” They will verify this by asking for a copy of the student’s driver’s license to prove his or her address. This is the part of the process where some planning can play a part. In other words:  Do you want the custodian of the college-bound child to be the higher or lower wage earner?

With all the information available on the internet these days, parents have more time to plan for college than they ever did before. Even so, families are wondering “How are our sons and daughters going to get work when they graduate? How are we going to get college loans paid off?  How can we reduce the cost of college?”

I think it’s definitely needed. Kids cannot continue to pay these higher prices, and neither can their parents.

Start planning today to make sure you don’t end up with less retirement savings just because you want your son or daughter to get a good education.

Bob Bordett

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