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A common proverb reminds us that half of marriages end in divorce. To be more exact, approximately 42% of married couples are divorced. It should be noted that the divorce rate for couples without children is 40% higher than those with children. It’s often said, for good reason, that divorce is hardest on the children. Speaking as someone with many good friends who have divorced parents, it clearly takes a toll on them, especially as they go off to college. With so much to worry about on both the away and home fronts, students from divorced families should not have to concern themselves with the effects their parents’ decision will have on their financial prospects. Unfortunately, it is a topic that must be considered in this scenario, so let’s take a look at what happens to one’s student loans if their parents separate.
Custodial Parents and the FAFSA
If there’s a silver lining, however small, it’s that the government does take divorce into account when allocating funds. This means that, if your parents have been divorced, you will most likely be eligible for more need-based financial aid. The FAFSA program, which is administered by the Department of Education, asks for a student’s “custodial” parent on the form, meaning the parent who has cared for the student the most in the eight months prior to the form’s filing. Sometimes it’s obvious who the custodial parent is, but if one’s parents share custody, one may have to parse time down even further. FAFSA even asks one to count the nights with each parent if necessary, just so there’s no confusion over who the parent of record is.
The “custodial parent” will be listed on the form as the primary caregiver, and it is this person’s income that would usually be taken into account for prospective financial aid. However, FAFSA is wary that this could lead to some taking advantage of a loophole in the laws, so the forms also ask for the amount of financial support given by each parent. In order to prevent “gaming the system,” so to speak, FAFSA almost always defaults to providing financial aid based on the income of the parent who earns more money or provides more financial support.
Step-Parents and Financial Aid
Okay, so we have that down. Now, you might be asking yourself, what if your parents have been divorced for several years, and you now have a stepfather or stepmother? Well, it’s pretty simple, actually: if that person is married to your custodial parent, their income must be reported on the FAFSA form as well. Basically, your stepparent as taking the place of your biological mother or father in the eyes of the law, as FAFSA sees it. Without exception, the income and assets of one’s stepmother or stepfather MUST be reported, with the risk of incurring fraud charges. Another interesting wrinkle to be aware of: even if your stepparent didn’t marry your biological parent until the current year, they still have to disclose their income for the previous year.
As we can tell, as long as one breaks everything down into a process that’s easy to understand, there is not a significant amount of added stress or confusion to the student loan management system added by divorce. The FAFSA program is aware of the wrench divorce throws into the personal lives of students and does not wish to make it even harder by complicating their financial future. As long as one understands key terms like “custodial parent” and key concepts like the addition of stepparents to income reports, there’s nothing that will give you a hard time within the process.
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| Lender | Rates (APR) | Eligibility | |
|---|---|---|---|
 |
5.34%-15.96%* Variable
3.99%-15.61%* Fixed
|
Undergraduate and Graduate
|
VISIT CITIZENS |
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4.92% - 15.08% Variable
3.99% - 15.49% Fixed
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VISIT SALLIE MAE |
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4.50% - 17.99% Variable
3.49% - 17.99% Fixed
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Undergraduate and Graduate
|
VISIT CREDIBLE |
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6.00% - 13.75% Variable
3.99% - 13.75% Fixed
|
Undergraduate and Graduate
|
VISIT LENDKEY |
 |
5.50% - 14.56% Variable
3.69% - 14.41% Fixed
|
Undergraduate and Graduate
|
VISIT ASCENT |
 |
3.70% - 8.75% Fixed
|
Undergraduate and Graduate
|
VISIT ISL |
 |
5.62% - 16.85% Variable
3.69% - 16.49% Fixed
|
Undergraduate and Graduate
|
VISIT EARNEST |
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5.00% - 14.22% Variable
3.69% - 14.22% Fixed
|
Undergraduate and Graduate
|
VISIT ELFI |
