Believe it or not there is an upside to divorce when it relates to matters of college financial aid. The FAFSA (free application for federal student aid) is the dreaded form that every parent with college aged children must fill out every year. In conventional families, the income of both parents is taken into consideration. In divorced families, the custodial parent fills out the FAFSA and it’s only their income that’s considered. In many cases, this has a big impact on financial aid eligibility.
Furthermore, for those with a 529 savings plan for college, the 529 plan should be held in the non-custodial parents name so the custodial parent won’t have to report it on their FAFSA.