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What to do when parents are divorced, and in situations with step-parents, foster care, etc.

Video transcript

- If you are dependent and you are not living in a traditional two-parent home where both parents are married, it can be very confusing to figure out which parent, or which parent's household should fill out the financial aid forms, even though which parent fills it out can have a major impact on your college costs. So if your parents are divorced or separated, the parent with whom you have lived the majority of time over the last 12 months is the parent who should fill out the financial aid forms and report their income and asset information. This can lead to some inequities, unfortunately, particularly in cases where one parent earns a lot more money than another parent. Some families want the parent who makes the least amount of money to file the financial aid forms because they know that that means they'll get the most financial aid from the colleges and universities. However, the rule is that if your parents have joint custody of you, the parent who has provided the majority of your financial support over the last 12 months should be the one who files the financial aid forms, whether or not they make more or less money than the other parent. Some schools that use or require the CSS profile will require both parents to fill out the financial aid forms, whether or not they are divorced or separated. They use something in addition to the profile itself called the non-custodial profile, which basically just means that they are requiring the information from the other parent as well. So let's say your parents are divorced or separated and you live the majority of the time with your mother and she makes about $60,000 a year in adjusted gross income, and your father makes half a million dollars in adjusted gross income. At a FAFSA-only school, they will only see your mother's income and asset information, but at a school like Duke University or Carlton College, which requires the CSS profile and the non-custodial profile they will require that both your mother and father report their income and asset information. So this means at that CSS profile school that uses the non-custodial profile, your college costs are gonna be a lot higher than at the FAFSA-only schools because they're looking at both parents' information, including the parent who is a lot wealthier. If you are living the majority of time, or receiving the majority of your financial support from a parent who has remarried, your step-parent's information must also be included on the financial aid forms. And any pre-nup arrangement that your parent and step-parent have does not affect this rule. So let's say your dad married a wealthy heiress and before they got married, she had your dad fill out a pre-nup arrangement that said she didn't have to pay for your college education. Nonetheless, regardless of that pre-nup, the financial aid rules say that her income and assets, as well as your father's income and assets, must be reported on the financial aid forms, even if your dad didn't make much money, they are gonna look at the millions and millions of dollars that your wealthy heiress step-mom has and they're not going to give you any financial aid, even though your dad is paying for all of your college expenses. If you are adopted, your adoptive parents are considered the same thing as your biological parents for purposes of financial aid. So they must fill out the FAFSA and CSS profile and report their income and assets. However, foster parents are not considered parents for purposes of financial aid, so they do not have to report their income and asset information at all, and do not have to fill out the FAFSA and CSS profile. If you're living with a legal guardian, your legal guardian does not have to fill out the financial aid forms. Also if you're living with a grandparent, they also do not have to fill out the financial aid forms, unless they have legally adopted you, or a court of law requires them to support you financially. So basically, if you live with foster parents, legal guardians, or grandparents, you are considered independent, and that means no parents have to fill out the financial aid forms. You are the only one who will fill that FAFSA or CSS profile out. So you only need to report your own income and assets on these financial aid forms. So a lot of times I get asked whether a student can be considered independent so that colleges and universities are not looking at parent income and asset information in making their decisions about financial aid. There are actually very specific criteria for when you can be considered an independent student. First of all, if you are at least 24 years of age you can be considered independent. Also if you are a graduate or professional student who is pursuing a course of study beyond a bachelor's degree, you are independent. Also if you are married, you are independent, or if you have a child or legal dependent of your own. Likewise, you might be a veteran of the armed forces or one of the service academies, as long as you were honorably discharged and were on active duty. Another reason you might be independent is if you are a ward of the court, or if you are an orphan, that is both of your biological parents are deceased. And last but not least, for various reasons, you might be considered an emancipated minor by the state in which you live. So those are all various reasons for why you might be able to be considered an independent, rather than a dependent student, for purposes of financial aid.