The Wall Street Journal - 21.10.2019

R10| Monday, October 21, 2019 THE WALL STREET JOURNAL.

JOURNAL REPORTS | WEALTH MANAGEMENT

F

illing out college financial-aid

forms can be confusing for anyone.

They may become even more con-

fusing for families where parents

are divorced or unwed, or for

blended families.

The Free Application for Fed-

eral Student Aid, or Fafsa, gener-

ally requires personal and financial infor-

mation from dependent students and their

parents in order to determine eligibility for

federal financial aid. It’s particularly impor-

tant to fill out the Fafsa correctly since it

“can make a huge difference in the possibil-

ity of aid,” says Carrie Fellon, a certified fi-

nancial planner and financial strategist at

Agili, a registered investment advisory firm

in Richmond, Va.

Here, then, are answers to some of the big-

gest questions blended families and those

with divorced or unmarried parents have

about filing for financial aid:

Who is a parent?

For Fafsa purposes, a “parent” refers to a bio-

logical or adoptive parent or a person deter-

mined by the state to be a parent. Grandpar-

ents, foster parents, legal guardians, older

siblings, uncles or aunts and widowed step-

parents aren’t considered parents on the

Fafsa unless they have legally adopted the

student, according to the U.S. Education De-

partment’s Federal Student Aid office.

In the case of divorce,

which parent must

provide financial

information on the Fafsa?

In a divorce or separation where the parents

don’t live together, only one parent needs to

provide his or her information. This parent,

deemed the custodial parent for Fafsa purposes,

is the parent the student lived with more during

the past 12 months. If the student lived the

same amount of time with both parents, then

the parent who provides the information should

be the one who provided the most financial sup-

port during the past 12 months.

Keep in mind that nearly 400 colleges, uni-

versities, professional or graduate schools, and

scholarship programs also require families to

file the College Board’s CSS Profile to be con-

sidered for institutional aid. Many of the re-

porting requirements for the CSS Profile are

different from Fafsa requirements. (See accom-

panying story.)

What if the custodial

parent has remarried?

Custodial parents who have remarried are re-

quired to include their spouse’s financial infor-

mation on the Fafsa. This often comes as a

surprise to stepparents, especially if they have

no intention of providing support to the stu-

dent, says Valerie Tocci, a divorce litigator and

partner at Stutman Stutman & Lichtenstein, a

law firm with offices in New York City and

Mineola, N.Y.

A caveat: A stepparent’s financial informa-

tion should be included on the Fafsa only if he

or she is married to the custodial parent as of

the date the Fafsa is filed or has adopted the

student as of that date, says Mark Kantrowitz,

publisher and vice president of research at

Savingforcollege.com, an information and re-

source site.

What happens if a divorced

or separated couple is still

living together?

As long as the student’s parents are living

together, both incomes generally need to be

reported, even if they consider themselves

separated. Living on separate floors of the

same house, for example, doesn’t count as

maintaining separate residences, Mr. Kan-

trowitz says. If spouses are separated but

living together, they should select “Married

or remarried” on the Fafsa, and not “Di-

vorced or separated,” according to Federal

Student Aid.

Marilyn Ponti, director of financial aid at

Whitman College in Walla Walla, Wash., en-

courages families who have special circum-

stances to reach out to the financial-aid office

with a letter of explanation about what’s go-

ing on in the family. Financial-aid officers

have some discretion when it comes to con-

BYCHERYLWINOKURMUNK

sidering the use of only one parent’s income

on the Fafsa and can use professional judg-

ment in some of these special circumstances,

she says.

What about legal parents

who are unmarried but

living together?

Biological or adoptive parents who are un-

married but living together should choose

the option on the Fafsa that states: “Unmar-

ried and both legal parents living together.”

In these circumstances, it’s advisable to call

Federal Student Aid for assistance with an-

swering income-related questions.

What happens in the case

of a same-sex marriage?

A couple in a same-sex marriage is considered

to be married on the Fafsa, if they were legally

married.

Who should be included in

the size of household

question?

The household size should include the student,

the parent or parents living in the household,

the number of other children (even if they

don’t live in the household) who will receive

more than half of their financial support from

the parent or parents for the period specified

by the Fafsa, and the number of people who

aren’t the parent’s or parents’ children but

who live with them, receive more than half of

their support from them and will continue to

do so for the specified period.

What happens if now-

divorced parents were

married and filing jointly

on tax returns used for the

Fafsa?

Where possible, the financial information

should be separated and only the custodial

parent’s information should be reported, even

if tax information may say otherwise, says

Charlie Javice, founder and chief executive of

Frank, which provides families with free help

filling out the Fafsa.

The reverse is also true: A parent who is

remarried should include the new spouse’s fi-

nancial information when filling out the

Fafsa, even if the tax information indicates

single status, she says.

These types of situations are highly likely

to be flagged for verification because of the

inconsistencies, Ms. Javice says. This could

require additional paperwork such as proof

of divorce and bank statements. She advises

families in these types of situations to con-

tact the financial-aid office immediately after

the student is admitted.

Ms. Winokur Munk is a writer in West

Orange, N.J. Email her at [email protected].

What divorced and unwed

parents, and blended families,

need to know about the college

financial-aid forms

Aid Package

Average assistance per undergraduate student*

Breakdown of grant money awarded and loans

taken out for the 2017-18 academic year

Grant aid $8,970

$4,510

$1,310

Federal loans

Other aid

Grants

Loans

Institutional

grants

46%

9%

13%

Federal

grants

32%

Private and

employer grants

State grants

Federal subsidized loans

Parent

PLUS loans

Nonfederal

loans

Grad PLUS loans Perkins loans |1%

20%

10%

12%

11%

*Per full-time equivalent student for the 2017-18 academic year, the

latest data available

Source: College Board Trends in Student Aid 2018

Federal

unsubsidized

loans

46%

Fafsa and the Divorced Parent

EXPERTS' VOICES

Benefits of a Partial

Roth Conversion

If you’ve saved a lot in an IRA, then

you’re going to have to take big required

minimum distributions, and, potentially,

pay high taxes on those withdrawals.

The reality is that we all pay taxes.

But you shouldn’t pay any more than

necessary. That’s why I often suggest

transferring some of your traditional

IRA savings into a Roth IRA with a Roth

conversion. A common misconception,

however, is that a Roth IRA conversion

is all or nothing. But, in fact, you can

convert smaller amounts over several

years. And when you get the timing and

size of those conversions right, you can

stay within your current tax bracket

while reducing the size of your tradi-

tional IRA and future RMDs.

The biggest benefit from a partial

Roth conversion comes when your cur-

rent tax rate is lower than your ex-

pected tax rate will be when RMDs kick

in at age 70½. In those cases, you can

calculate the exact amount of IRA as-

sets you can afford to convert each year

while staying within your current, rela-

tively low tax bracket.

—Peter Lazaroff, chief investment officer

at Plancorp

The Experts are industry and thought leaders

who write on topics of their expertise. You

can read this full blog post and others at

WSJ.com/Experts.

For some schools, filling out the Free Applica-

tion for Federal Student Aid, or Fafsa, isn’t

enough. To be considered for institutional aid

and grants at nearly 400 colleges, universities,

professional or graduate schools, and scholar-

ship programs, families must also fill out the

College Board’s CSS Profile. And the require-

ments for the CSS Profile can differ from the

Fafsa’s, especially for blended families and

those with divorced or unwed parents. Here

are answers to questions those families

might have about the CSS Profile.

Who is considered a parent for the pur-

poses of the College Board’s CSS Profile?

The CSS Profile requests information about

the various familial relationships students

may have, including their biological or adop-

tive parents, stepparents, partner of a bio-

logical or adoptive parent and legal guard-

ians, according to the College Board.

In the case of divorce or separation, which

parent is required to provide financial in-

formation on the CSS Profile?

Dependent students are asked for financial in-

formation from the custodial parent. This is

the parent with whom the student lived most

during the past year, or if the same amount

of time was spent with each parent, the one

who provided more financial support.

Some colleges require information from

both of the biological or adoptive parents,

even if they are separated or divorced, says

Blaine Blontz, founder of Financial Aid Coach,

which helps families navigate the college-

planning process. Students should ask each

school about its particular requirements.

They can also find relevant information from

the College Board’s list of colleges that re-

quire a CSS Profile at profile.collegeboard.org/

profile/ppi/participatinginstitutions.

If both parents are required to complete

an application, they will begin at the same

port from that parent.

The noncustodial parent is asked to pro-

vide information for everyone who lives in

his or her household and receives more than

half of their support from the noncustodial

parent. The noncustodial parent is also

asked to report any children under age 24

who are shared with the student’s parent,

no matter where they live, according to the

College Board.

What happens in the case of a same-sex

marriage?

Parents in same-sex marriages are consid-

ered married.

What else might students from divorced,

separated or blended families need to

know about the CSS Profile?

Each college or program has its own re-

quirements for who is required to complete

the CSS Profile; families with questions or

concerns should contact the college’s finan-

cial-aid office.

Families should also be sure to contact

schools that require noncustodial informa-

tion as soon as possible if they believe it

will be difficult to obtain the financial infor-

mation and general cooperation from the

noncustodial parent, says Mr. Blontz, the

college consultant.

“While schools can waive the require-

ment of noncustodial information, it’s not a

given if the noncustodial parent is simply

being uncooperative,” he says. “These cases

can hold up financial aid for the student un-

til either the noncustodial parent informa-

tion is received or the requirement is

waived.”

More information to help divorced and

separated parents complete the CSS Profile

is available at cssprofile.collegeboard.org/

info-divorced-separated-parents.

—Cheryl Winokur Munk

AND THEN THERE’S THE CSS PROFILE...

website and will be asked similar questions

in an online application that will be custom-

ized for each of them, according to the Col-

lege Board.

What happens if either of the parents is

remarried?

If a parent has remarried or has a new part-

ner, the applicant must report information

from both on the CSS Profile.

What happens if either parent is not re-

married but is living with someone and

providing financial support?

The student must report the parent’s part-

ner’s information on the CSS Profile. The ap-

plicant must identify the current marital sta-

tus of the parent and partner.

How should a student who comes from a

blended family answer questions pertain-

ing to household size?

In the CSS Profile, the custodial parent is

asked to report information for everyone

who lives in his or her household and re-

ceives more than half of their financial sup-

Nearly 400

Schools requiring the CSS

Profile to apply for institutional

aid and grants

$9 billion

Average total nonfederal

financial aid given to

undergraduate, graduate and

professional students

Source: The College Board

Check One

How first-year college applicants selected

their parents’ marital status for the 2018-19

academic year

Source: The Common Application

69.5%

15.3

7.6

5.2

0.2

Married

Divorced

Never married

Separated

Widowed |2.2

Civil union/domestic partners

$1.48 trillion

Student debt outstanding

as of June 2019

For the 2018-19 academic

year, students applied to....

65%

Five or fewer schools

91%

10 or fewer schools

2%

15 to 20 schools

Source: Federal Reserve Bank of

New York; The Common Application

wsj_20191021_r010_p2jw294000_0_r01000_1________xa2019.crop.pdf 1 21-Oct-19 06:07:30