In this segment from the episode of Motley Fool Answers, Robert Brokamp and Alison Southwick interview Brock Jolly and Tim McFillin from TheCollegeFundingCoach.org about how financial aid is decided for students with divorced parents. There’s a common misperception that it’s based on the income of the parent who claims the student on their tax return, but in fact it’s based on many factors.

A full transcript follows the video.

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This video was recorded on April 10, 2018.

Robert Brokamp: Myth No. 5. “For divorced couples, aid is based on the income of the parent who claims the student on her or his tax return.”

Brock Jolly: Well, it’s a very common misperception. The reality is there are seven questions that determine who the custodial parent is. And I won’t go through all seven, but what I will tell you that the starting point is who provides greater than 50% of the support for the child. The second question is who does the child live with more than 50% of the time? So, there’s a series of questions.

The last or seventh question they ask is who claims them on the tax return. The point of that is do not think just because Mom or Dad claims them on the tax return is necessarily considered to be the custodial parent. And again, there are ways of strategizing it. If in divorce proceedings they say, “You’ve got equal custody,” maybe one parent, who coincidentally might be the parent who earns less money or has less in assets and maybe provides an extra dollar or two during the course of the year could be considered the custodial parent. Understanding the cards that you’re dealt, understanding how the rules work, and being able to approach it from the mindset may, in fact, allow you to qualify for more need-based aid as a result.

Tim McFillin: So, besides a leap year, there’s an odd number of days in the year [365 days]. The custodial parent, based on the first question, would be which one has the kid for one more day than the other, and if it’s 51% to 49%, that’s the custodial parent for colleges. So, if you’ve got one parent whose income, as the custodial parent, is $50,000 and the other parent is $150,000; if it’s a FAFSA-only school, like we have mentioned before, then they will only count that custodial parent’s income and assets.

Not only that, there’s a couple of CSS Profile schools out there that will not ask about the non-custodial parent. Boston College and Boston University are two examples of that. In other words, even though they have the CSS Profile, which is just additional financial questions like we had mentioned previously where they typically ask about retirement assets, home equity, other things that FAFSA may not count; there are some schools that do not ask about the custodial parent.

Again, where you’re applying to school, and specifically your financial situation in your family in that given time [because all that matters is that one year], is very important in determining where your kid should apply and where they should try to maximize aid. Unless you’re taking the time to do this, you have your full-time job. We all have the same limitation of 24 hours in a day. How much time do you have to look up all this stuff? How much effort does your exhausted high school senior, after taking all the SATs and all the stress of applying for college want to look up this stuff?

That’s where we really try to add value. I think that’s why so many people come to our workshops nationally, because there’s so much information, and it’s hard to sift through it all as a parent. To find the time.

Brokamp: Well, thanks for coming in, guys!

Jolly: Absolutely! Thanks for having us!

McFillin: A pleasure. It was great!

Brokamp: It was very helpful. If you’d like to learn more from Tim and Brock, you can visit their website: TheCollegeFundingCoach.org.

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