Divorce has a number of personal and social benefits for you, such as allowing you freedom and the ability to move on from a relationship that wasn’t working. You likely did not know that when it comes to your children’s prospects in regards to paying for college, your divorce may have helped them out, too.
The free application for federal student aid (FAFSA) is a vital tool in getting the money to pay for college. An important quirk of FAFSA is that through your divorce you may be able to get certain advantages. Essentially, depending on how assets were divided, alimony settled and custody awarded you may be in a better situation than if you remained married. Here are the important ways the advantages will be decided.
FAFSA’s calculation only takes into account the household of the parent that has primary custody of the child. If your son or daughter spends more than 50 percent of their time with you, then that makes you the custodial parent. The income and assets of your ex are completely ignored.
529 college savings plan is an asset
The assets of any 529 savings account are a part of what would be considered by FAFSA… provided that the parent with custody is the owner of that account. When assets are divided during the divorce, one of the options could be to split the account or to award it to one parent or the other. In a strategy to plan for college expenses, one parent could take the savings account and not have primary custody, allowing for a larger financial aid package.
Step-parents, Alimony and Child Support
There are also some matters that may negatively impact your post-divorce college expense planning. If the primary custodian were to be remarried, or if there were a generous alimony and child support agreement, then the advantages of the divorce may be mitigated.
Planning for college is a priority
In any case, planning for how your soon-to-be college student is going to afford their education is a vital part of your divorce. Both you and your ex should work to get on the same page when it comes to building the best future for your kids.