How Should Divorced Parents Split a Child's College Costs?
May 23, 2011
I am the custodial parent for my daughter who will go to college this fall. It will be her first year. My income was reported on the FAFSA. This included child support, although my ex-husband has recently stopped paying child support. Now the ex-husband wants access to half of the funds available through the FAFSA to use toward his half of our daughter’s college costs. His income far exceeds mine and was not taken into consideration for federal aid. Further, his income would have been too high to have qualified for any federal aid. Am I obligated to allow him to use half of the federal aid for his half of our daughter’s college expenses? My opinion is that the financial aid was awarded based on my income (and child support which I now no longer receive) and therefore, it is to help me pay for her tuition, room and board, books and fees, not an ex who doesn’t have custody, doesn’t pay child support, but who says he plans to pay for half of her college expenses. — Mary F.
If your ex-husband’s obligation to provide half of your daughter’s college expenses is due to a formal college support agreement, you need to review the terms of that agreement and to consult with a qualified attorney who is familiar with state law concerning college support obligations. There are no federal laws or regulations that speak to how divorced parents should split college costs.
Let’s assume instead that your ex-husband voluntarily agreed to pay for half of your daughter’s college costs and that you are seeking a fair method for splitting the costs.
While the amount of financial aid is based on an analysis of the custodial parent’s income and assets, the federal need analysis formula assumes that the custodial parent will be paying for the college costs on his or her own, not splitting the costs with a wealthier ex-spouse. The financial aid formula also considers child support and alimony payments received by the custodial parent from the non-custodial parent, so it is not entirely accurate to argue that the amount of financial aid was based solely on the finances of the custodial parent. Thus it would not be fair to credit the financial aid toward just one parent’s share of the full cost of attendance. Both of you should be grateful that the financial aid is based primarily on your finances, since otherwise your daughter would receive a lot less financial aid and both of you would be paying a much greater share of her college costs.
Instead, the focus should be on how to allocate the remaining costs, not the financial aid, since the financial aid is provided by the government and the college, not the parents.
The remaining costs may be calculated by subtracting the need-based financial aid package from the college’s cost of attendance. When calculating the remaining costs, do not subtract any non-need-based loans from the cost of attendance. Some colleges include non-need-based loans, such as the unsubsidized Stafford loan and Parent PLUS loan, in the financial aid award letter to make the family aware of the availability of these lower-cost federal education loans. But these loans do not reduce the cost of attendance. These loans are used to cover the family’s share of college costs, spreading the costs out over time.
Note also that a loan is a loan is a loan. Unless your ex-husband is obligated to repay the loan, it does not represent part of the college support he provides. Likewise, unless you are obligated to repay the loan, it does not represent part of the college support you are providing. For example, the Stafford and Perkins loans are student loans, borrowed by your daughter. As such they do not represent college support provided by either you or your ex-husband.
On the other hand, the Parent PLUS loan is a parent loan. Only the parent who borrowed the Parent PLUS loan is required to repay it. You and your ex-husband can each individually borrow from the Parent PLUS loan program to pay for your share of college costs, per the regulations at 34 CFR 682.201(c)(3). If a student’s parents are divorced, both the custodial parent and the noncustodial parent are eligible to borrow from the Parent PLUS loan program, provided that the combined loan amounts do not exceed the cost-of-attendance minus other aid received.