Child Support and FAFSA Applications

As mentioned in other articles on our site, dissolution is generally a hotly-contested issue, even more so when there are children born from the marriage. A major issue that regularly comes up, is who is going to pay for that child’s college education; this issue is made exponentially more ripe for conflict because many dissolution orders don’t address the issue of college tuition, since most children are over the age of 18 when they go to college (child support obligations end when a child reaches the age of majority, which is 18).

To remedy this issue, approximately sixteen states have adopted postsecondary (college) child support statutes, which essentially force divorced parents to support their children’s college tuition. (ALA. CODE § 30-3-1 (1975); CONN. GEN. STAT. § 46b-56c (2011); HAW. REV. STAT. § 580-47 (2015); 750 ILL. COMP. STAT. § 5/505 (1991); IND. CODE ANN. § 31-16-6-2(effective July 1, 2007); IOWA CODE § 598.21 (effective July 1, 2009); MASS. GEN. LAWS ch. 208, § 28 (effective July 1, 2012); MISS. CODE ANN. § 43-19-103 (1989); MO. REV. STAT. § 452.340 (effective Aug. 28, 2011); N.J. STAT. ANN. § 2A:34-23 (effective Sept. 10, 2014); N.Y. DOM. REL. LAW § 240 (McKinney effective Jan. 12, 2014); N.D. CENT. CODE ANN. § 14-09-09.7 (1999); OR. REV. STAT. § 107.108 (2011); S.C. CODE ANN. § 20-3-160 (1976); UTAH CODE ANN. § 30-3-5 (amended 2013); WASH. REV. CODE § 26.09.170 (effective June 10, 2010)). However, California has not addressed this issue yet.

This article will: (1) briefly address the importance of a college education, (2) briefly discuss how Free Application for Federal Student Aid (“FAFSA”) works, and (3) briefly discuss the impact child support has on eligibility for student aid.

  1. The Importance of a College Education

Since the Great Recession of 2008, the rates of college attendance have skyrocketed. Simultaneously, and directly correlated to the sharp increase in college attendance, the tuition for attending post-secondary educational institutes has sky rocketed as well. Ultimately however, in an economy where more people are obtaining college educations it is critical that a child obtain a college diploma if they want to remain competitive in the job market; a common lamentation by those graduating from college after 2012. It cannot be denied that receiving a college education will provide an individual with greater financial stability (which many argue is good for the economy as a whole), but a college education has also been shown to increase an individual’s overall happiness and health. Further, graduating from college provides tangible benefits to the individual, even where their area of study is irrelevant or where a degree is not a prerequisite for the job itself. In a recent study, a full-time employee who has received their bachelor’s degree were found to receive approximately 83% more income from employment that their counterparts with a high-school diploma. Finally, individuals with a college degree are notably less likely to be incapable of finding employment. With all those benefits in mind, it stands to reason that a college education is of the utmost importance, but who is going to pay for this critical aspect of a child’s life?

  1. Attendance and Cost on the Rise

In 2012, one-third of individuals ranging from the ages of 25 to 29 earned a bachelor’s degree or higher; a record high. Roughly 90% of individuals ranging from the ages of 25 to 29 have received a high-school diploma, and nearly 63% have completed a portion of their college education. As noted above, the number of people who received bachelor’s degrees or higher in 2012 was an all-time high in this country and is mind-boggling when contrasted to a period of time where college was only available to the wealthy elites of this nation. Despite these massive gains, not every college-aged individual has the ability to attend. 

  1. History of Parental Support

The notion that parent’s have a legal obligation to support their minor children is well established in American jurisprudence. Specifically, parents are expected to provide their children with necessities including food, shelter, clothing, and medical attention. Up until 1971, this obligation lasted until the child was 21 years old (college age) and attained the age of majority. However, in 1971, the United States Congress ratified the 26th Amendment, which reduced the voting age from 21 to 18. Consequently, all states passed laws that reflected this new age of majority, including laws pertaining to child support. The net result was that child support obligations no longer extended to a child’s college years, a time where many children need support more than ever.

  1. The Cost of a College Education is on the Rise

At any social gathering where there are multiple parents of 18-24-year-old present, it is inevitable that conversations about how expensive a college education will come up. In fact, between 2013 and 2014, the average tuition fee plus room and board at a private non-profit 4-year educational institute is approximately $40,917; this number is reduced by roughly 25% for public non-profit educational institutes – $31,701. (Tuition and Fee and Room and Board Charges Over Time, 2003-04 through 2013-14, COLLEGEBOARD, http://trends.collegeboard.org/college-pricing/figures-tables/tuition-and-fee-and-room-and-board-charges-over-time-2003-04-through-2013-14 (last visited Nov. 1, 2014).).

In recent years, this rampant increase in college tuition has slowed down; however, between 2003 and 2013 this country saw college tuition increase by approximately 80%. While married couples have the ability to choose to provide financial support to their children as a unit, divorced parents certainly have a more difficult time making unified decisions that impact their finances significantly.

  1. How FAFSA Works

Financial aid for college affects married couples and divorced couples alike. When children receive little-to-no support from their parents in paying for college, they are forced to seek other options that will assist them in subsidizing the college education, this usually takes the form of financial aid. A popular form of financial assistance for the educational expenses associated with post-secondary education is the Free Application for Federal Student Aid (“FAFSA”).

Students are classified as either independent or dependent for purposes of determining FAFSA eligibility. When a student is deemed to be a dependent, their FAFSA eligibility is dependent on their parents’ incomes (thus the dependent of a high-income family is unlikely to be FAFSA eligible). Conversely, where a student is deemed an independent, or a dependent of a low-income family, their FAFSA eligibility will likely be approved.

For children of divorced parents, a dependent child is required to disclose their custodial parent’s income. Naturally, in most cases, a single-income earner will make less than a dual-income family. As such, students who are deemed of divorced parents are far more likely to be deemed FAFSA eligible than students who deemed dependents of married couples.

  1. Child Support and FAFSA Eligibility

  As noted above, students applying for FAFSA are categorized as either dependents of their parents, or independent of their parents for purposes of determining eligibility. If a student is deemed a dependent of their parents, their parents are required to disclose their relative incomes in order to their child’s FAFSA eligibility to be determined. In the case of a student who has divorced parents, their custodial parent’s income is the only income used in determining their FAFSA eligibility; naturally, the sole custodian of the child’s income is likely lower than it would be if they have a second income earner reporting their assets.

As a rule of thumb, the parent which the child lived with the most in the preceding year is the parent who provides their financial information on the FAFSA application. In the even that the student has spent an equal amount of time with both parents in the preceding year, then the parent who provides the most support is the parent whose income is utilized in the FAFSA application. It is important that this determination is based on who provides more actual support, as opposed to which parent claims the student as an exemption on their federal tax returns.

In 2009, the US Department of Education stated that “child support” for purpose of a FAFSA application only includes the amounts paid in direct compliance with a valid separation agreement, legal child support agreement, or a divorce decree. This means that voluntary payments from a non-custodial parent to their child’s education are treated as the child’s untaxed income. Unfortunately, this shifts a parent’s gift from a boon to a harm; it acts as though the child is making more money than they actually have – making the application reflect a higher “expected family contribution” (“EFC”) than is supported by reality.

As a natural corollary, the parent who is providing their child with voluntary payments for education (above what they may have been legally obligated to provide) is unable to reduce their own FAFSA income by the amount provided, resulting in a higher EFC for that parent. The practical effect of voluntary payments to the child is two-fold then, and ultimately creates a higher EFC than is correct.

Ultimately, it is in everyone’s best interest for the parent making the voluntary payments to their child’s educational fund to request that the Court modify the standing support agreement to include their voluntary payments.

At Maple’s Family Law, we understand that it is every parent’s dream to send their child to college; it is a path to a better life which is the ultimate goal of all parents. If you or a loved one are seeking advice on how to modify a support order to assist your child in becoming FAFSA eligible, contact us today.