Getting Remarried and Your Child’s College Financial Aid

    Getting Remarried and Your Child’s College Financial Aid

    By Amy Fontinelle

    If you are divorced or widowed but recently remarried or thinking about getting remarried, you need to know that the financial changes to your household that come with a new spouse might affect how much the government and colleges will expect your new household to contribute toward your child’s tuition and fees. Here is an overview of how remarriage can affect the financial aid a student is eligible for with schools that use the FAFSA process for financial aid as well as with schools that use CSS/Profile.

    How FAFSA Looks at Remarried Parents

    The federal government and most schools rely on the information you submit through the Free Application for Federal Student Aid to decide how much financial aid your child needs for college. FAFSA is only concerned with the income and assets of the custodial parent’s household. FAFSA does not define “custodial parent” as the parent who has legal custody, though. For FAFSA purposes, the custodial parent is the one the child lived with the most in the past 12 months or the one who provided more of the child’s financial support in the past 12 months. If a student’s custodial parent has remarried, that step-parent’s financial information gets factored into the student’s financial aid calculation.

    But if the student’s noncustodial parent has remarried, it has no effect on the FAFSA, which only collects data related to the custodial parent, said certified public accountant and certified financial planner DeDe M. Jones, managing director of Innovative Financial in Lakewood, Colorado.

    If a student’s custodial parent is thinking about getting remarried but hasn’t gone through with it yet, it’s worth considering how remarriage could help or hurt the student’s financial aid package. One option is to talk to someone who specializes in helping families maximize their financial aid. Another option is to use an expected family contribution calculator to see what FAFSA will likely expect you to contribute under each scenario.

    How Remarriage Can Hurt Financial Aid

    FAFSA ignores prenuptial agreements, so even if a custodial parent and step-parent have agreed that the stepparent will not be responsible for the custodial parent’s child’s college bills, the stepparent’s income and assets will still be factored into the student’s financial aid award.

    Suppose the stepparent isn’t going to contribute to the child’s university bills despite having the financial resources to do so, perhaps because he or she has biological children to provide for. It might make sense to postpone remarriage to avoid hurting the student’s chances of financial aid. (Calculator: How Much Do I Need for College?)

    “Living together is not considered married since the FAFSA form income information comes from the tax returns that are filed, and unless you're legally married, you cannot file a joint return,” said independent college counselor Gina Nisco, founder and president of Positive Next Steps in Connecticut. “A couple living together doesn’t have to include the nonbiological parent’s income on the FAFSA.”

    Nisco said she has advised many clients to hold off on a remarriage if possible, especially when a student is completely dependent on receiving the maximum financial aid to be able to attend their college or university of choice or to be able to attend school at all.

    However, any financial support that another adult provides to the student must be listed as untaxed income to the student on the FAFSA, according to FastWeb, a leading online resource about how to pay for college. If the future stepparent supports the child financially, this financial support will reduce the aid the student is eligible for because the FAFSA expects 50 percent of a student’s income to go toward college expenses.

    How Remarriage Can Help with Financial Aid

    The obvious way remarriage can help with financial aid is if your new spouse is willing and able to help pay for your child’s college education. This contribution is not government or college aid, of course, and it may lower the financial aid eligibility your new combined household, but it can still help get the tuition bills paid.

    The less obvious way?

    “Remarriage for the custodial parent can be helpful when, on balance, the new family has greater obligations in relationship to their assets and incomes as compared to the formerly single parent,” Jones said.

    For example, if there is more than one child attending college in the new, blended family or if there are more dependents on the income tax return, these changes may increase aid, Nisco added.

    “If the spouse of the custodial parent has no income or is a displaced worker, then the only income that will be relied on for financial aid purposes is that of the custodial parent, so the aid package will be based solely on that one income,” Nisco said. Expensive medical bills within the family, a change in the amount of child support received, decreased income from a layoff or disability, or even retirement can increase aid. If there are changes to income or to the family structure, experts advise parents to contact the financial aid office and speak with them.

    How School and Federal Financial Aid Formulas Differ Regarding Remarriage

    Some schools look beyond FAFSA and have their own formulas for deciding how much aid each family receives.

    There are 249 schools and scholarship programs that use a form called CSS/Financial Aid PROFILE (CSS stands for College Scholarship Service). In contrast to FAFSA, some of these schools and programs require financial aid applicants to disclose the noncustodial parent’s finances. You need to know if your child is applying to one of those schools and how it will consider your marital status when making its financial aid decisions.

    Schools that use CSS/Profile take a more holistic look at a family’s finances and use greater discretion when awarding aid, Jones said, and how a custodial or noncustodial parent’s remarriage affects financial aid at these schools depends on the situation. More resources may result in less aid, or more obligations (such as more dependents or more dependents in college) may result in a larger award.

    Nisco adds that some of the schools that use CSS/Profile only look at the incomes of the mother and the father to assess what the biological parents’ financial picture is; the stepparents are not factored in.

    In some situations, it might make sense to only or primarily apply to schools that do not request the noncustodial parent’s financial information. For example, suppose the noncustodial parent, who has a modest income and assets, gets remarried to someone with ample resources. However, the new spouse, quite understandably, does not want to pay to send someone else’s child — perhaps a child he or she barely has a relationship with — to college. A school that expects those resources to go toward the child’s tuition — whether it relies on FAFSA or CSS/Profile — will likely offer a lower financial aid award than a school that only looks at the custodial parent’s assets or that doesn’t factor in a stepparent’s assets.

    But you never know for sure how much aid you will receive from a particular college or university until you apply, so unless college application fees are a financial burden, it may be worth applying to schools that seem unlikely to award enough aid. Explain the situation to your child before he or she applies to help temper expectations.

    Nisco said that she has had cases where the student is not able to locate their noncustodial parent because they have lost contact. In these cases, it is important to be honest on the forms that the noncustodial parent’s location is unknown and, if necessary, notify the financial aid department that only the custodial parent and stepparent can contribute. “Don't ever feel embarrassed or afraid to speak to a financial aid counselor,” she said.

    Financial aid rules for loans can be hard to make sense of no matter what your family background, but when family finances are complicated by divorce or widowhood and subsequent remarriage, financial aid decisions get more complicated, too. Understanding how remarriage could affect your child’s financial aid eligibility can help you avoid ugly surprises and plan accordingly.

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    The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel.