When going through a divorce, your child’s future education might not be at the forefront of your mind. However, planning for college expenses is an aspect of divorce negotiations you should not overlook. During this process, you must consider how you and your former spouse will support your child’s higher education goals.
The latest changes to the Free Application for Federal Student Aid (FAFSA) process add another layer of complexity to this issue. If you are a divorced parent in Washington, understanding these changes is essential for effective financial planning and ensuring your child’s educational future.
A new “Parent of Record” definition
The updated FAFSA process changes how it defines the “parent of record.” Now, it is based on who provides the most financial support to the child, not who the child lives with most often. If you are the parent who contributes more to your child’s expenses, your financial information will play a key role in determining aid eligibility. This could mean more or less financial aid for your child, depending on your financial situation.
Changed treatment of child support
Previously, the receiving parent counted child support as income. Under the new rules, it counts as an asset. If you receive child support, it may increase your reported assets, potentially reducing aid eligibility. Conversely, if you pay child support, the rules no longer allow income deductions, which could also affect your child’s aid package.
Remarriage’s financial impact
The new FAFSA rules now factor in a stepparent’s finances if you have remarried. This includes their income and assets, regardless of whether they contribute to your child’s expenses. As a result, your household may appear to have a higher income on paper. This could potentially decrease your child’s eligibility for need-based financial aid. If you are considering remarriage, it is crucial to understand how this will impact your child’s future.
Charting a course for college
These FAFSA changes bring new considerations for divorced parents in Washington. Understanding these latest guidelines and how they affect your finances is crucial. By taking action now, you can help secure a brighter educational future for your child.