A Modern Family’s Guide to the FAFSA

Modern FamilyOne of my guilty pleasures is the TV show, Modern Family. This “mockumentary” style comedy pokes fun at what one TV critic described as “the evolving nature of what constitutes ‘family’.”

When I do my college planning workshops I always get asked which parent’s assets to use when filling out the FAFSA form. Considering the many forms that today’s modern family can take, it’s easy to see how one can get confused.

The answer to the question is important because it determines whose financial information is to be used when completing the FAFSA. According to the folks at the FAFSA, a student with divorced parents should use the financial information of the “custodial parent”; in other words, the parent that the student lived with the most during the previous 12 months.

To be clear, it’s not just the financial information of the custodian parent, but the financial information of the custodial parent’s household that gets reported on the FAFSA. Here is where things can get complicated for many families trying to complete the FAFSA form.

Let me give you some examples.

Example #1. Divorced parents. Student lives with Mom. Mom is single and does not live with anyone else other than her dependent children. Easy enough. Report only Mom’s financial information on the FAFSA. Even if Dad is a multi-billionaire, his financial information doesn’t get reported on the FAFSA. It doesn’t get any simpler.

Example #2. Same situation as above, but Mom got remarried in Las Vegas at The Little White Wedding Chapel on Valentine’s Day, the day before filling out the FAFSA form. Here you would use the financial information for both Mom and her new husband, even though he has not legally adopted the student and is only newly married. Mom’s income and asset information as well as her new husband’s income and asset information gets reported on the FAFSA.

Example #3.  The student lives with parents who are unmarried. Here, you would report the financial information of both individuals if they live together under the same roof even though they are not married. A few years ago this was not the case. However, in 2014 this rule was changed to include “unmarried parents who live together”.

Example #4. The student’s custodial parent is married to a same-sex spouse. With the 2013 Supreme Court ruling on the Defense of Marriage Act, the FAFSA rules were changed last year to account for same-sex marriages. Known as “Parent #1” and “Parent #2,” both parents in the custodial parent’s household must now report their financial information on the FAFSA form.

Example #5. The student lives with a legal guardian such as an aunt or grandparent. In this case, the student would be considered an independent student on the FAFSA form and would use only his or her financial information. The income and assets of the guardian are not included, since they are not considered to be parents. However, financial support that is provided to the student by the guardian is typically considered income to the student.

For more information

Many students live in non-traditional families. For more information about how to report your financial information on the FAFSA form contact them directly or make use of one of the free resources mentioned in my previous post.

In the meantime, if you have questions about how to cross the bridge between paying for college and saving for your own retirement, just ASK MIKE.