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How does divorce affect eligibility for student financial aid?

Mark Kantrowitz

September 15, 2009

I am separated, not divorced. I will be laid off from my job in October. My friends are advising me to get divorced, as that can help my kids get scholarships based on need (I have a high school senior and junior). I’m wondering if that’s true; if the kids live with me and I am divorced, especially without an income, would we qualify for need-based aid? Is that a smart move when my kids are bright and could possibly get merit scholarships? — Sherry H.

The rules are the same for separated parents as for divorced parents, so there is no need to get divorced in order to qualify for more need-based aid. Since your children live with you and you are separated, only your income and assets will be reported on the FAFSA. You will also have to report any alimony or child support you are receiving from your ex-spouse.

The separation does not need to be a legal separation. An informal separation is treated the same as a legal separation or divorce. However, parents with an informal separation cannot cohabit (not even on different floors of the same house), so the college financial aid administrator will want to see proof that the parents maintain separate residences, such as copies of utility bills, leases or mortgage payments for separate residences. College financial aid administrators will suspect a sham separation if one parent claims to have slept on a friend’s couch or stayed in hotels.

Many parents overestimate the ability of their children to win scholarships. If your children do win some scholarships, the amount of need-based aid will be reduced. However, many colleges have favorable policies that allow all or part of the scholarship to replace loans in the need-based financial aid package.

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