Which of a Student's Divorced Parents Must Complete the FAFSA? Is the Stepparent's Information Reported on the FAFSA?

Which of a Student's Divorced Parents Must Complete the FAFSA? Is the Stepparent's Information Reported on the FAFSA?

I will be filling out the FAFSA soon for my daughter who will be

attending college next fall. My question is regarding her father, who

is my ex-husband. Her father does not pay child support and has not

supported her financially since our divorce 5 years ago. Do I have to

include his financial information, or any of his information, on the

FAFSA? Also, I have remarried, and my daughter lives with me and her

step-father. Do I have to include her step-father’s information, both

financial and personal, on the FAFSA?

— Kari L.

You must include the step-father’s information, not your ex-husband’s

information, on your daughter’s Free Application for Federal Student

Aid (FAFSA).

When a student’s parents are divorced or separated, only one parent’s

information is reported on the FAFSA. This parent is often referred to

as the custodial parent. The term custodial parent has

nothing to do with which parent has legal custody of the student. The

custodial parent is defined in section 475(f)(1) of the Higher

Education Act of 1965 as the parent with whom the student lived the

most during the 12 months ending on the FAFSA application date. Since

your daughter lives with you, you are responsible for completing the

FAFSA.

If your daughter lived with you and your ex-husband equally or with

neither of you, the custodial parent would be the parent who provided

more support to her during the 12 months ending on the FAFSA

application date. Since there usually are an odd number of days in the

year, this situation most often arises in leap years, in recent

divorce cases, when the parents continue to live together after the

divorce or when the student no longer lives at home. Cash support

includes money, gifts and loans. It also includes food, clothing,

housing, car payments and expenses, auto insurance, medical and dental

care and insurance, college costs and any money paid to someone else

on her behalf. Money you receive for her from her stepfather and

government benefit programs for dependent children counts as part of

your support of your daughter. Note that if the non-custodial parent

provides some cash support for your daughter beyond the requirements

of a legal child support agreement, this money must be reported as

untaxed income to your daughter on her FAFSA.

If both parents split the student’s support equally or neither

provided support during the 12-month period, then the custodial parent

is the parent who provided more support during the most recent

calendar year during which either parent provided support for the

student. It is quite rare for a student to live with both parents and

receive support from both parents equally. Usually there is at least a

day or a dollar difference. If none of the statutory criteria apply,

the college’s financial aid administrator will determine which parent

is considered the custodial parent; financial aid administrators

usually choose whichever parent has the greater income.

Section 475(f)(3) of the Higher Education Act of 1965 specifies that

if the custodial parent is married as of the FAFSA application

date, then the stepparent’s income and assets must be reported on the

FAFSA. There are no exceptions to this statutory requirement, not even

if the parents have a prenuptial agreement. The stepparent’s income

during the prior tax year must reported even if the stepparent and

custodial parent weren’t married until after the end of the prior tax

year.

(If the custodial parent dies, the non-custodial parent becomes

responsible for completing the FAFSA. The income and assets of the

stepparent who was married to the custodial parent are no longer

reported on the FAFSA, even if the student continues to live with the

stepparent. Any support received by the student from this stepparent

will be reported as untaxed income to the student on her FAFSA. If the

student has had no financial support from or significant contact with

the non-custodial parent for an extended period of time, some colleges

will use a dependency override to treat the student as independent.)

Note that separation is treated the same as divorce. A separation does

not need to be a legal separation. An informal separation is

considered a separation for federal student aid purposes, but the

parents may not live together. Colleges are often suspicious of recent

separations because of a high frequency of sham separations. They will

want to see proof that the parents maintain separate residences and

that the relationship has ended. Having one parent live in a hotel

room, with friends and family or in a separate bedroom in the same

house is usually not considered sufficient.

When one divorced parent has much lower income than the other parent,

it can be financially advantageous to have the parent with the lower

income complete the FAFSA. But falsely identifying this parent as the

custodial parent is fraud. Likewise, failing to report the income and

assets of the stepparent on the FAFSA is fraud. Colleges legally may

not disburse federal student aid until all discrepancies are

resolved. For example, if the student’s custodial parent lives in a

different school district than the student’s high school, the college

financial aid administrator will want more information to resolve this

apparent discrepancy. College financial aid administrators often ask

for a copy of the original divorce decree or separation agreement to

verify assertions concerning living arrangements and child support. If

a college financial aid administrator discovers credible evidence of

fraud affecting eligibility for federal student aid or the amount of

aid, the college is required to refer the case to the Office of the

Inspector General at the US Department of Education for further

investigation. Criminal penalties for financial aid fraud include

fines of up to $20,000 and/or imprisonment for up to 5 years, in

addition to disgorgement of the fraudulently-obtained student aid

funds.

Source: Fastweb

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