“To illustrate how this can be a boon for some families, let’s assume that the mother is a physician making $200,000 a year and the father is a school teacher making $50,000. If the child lived with the dad most of the year, he would declare his father’s lower income, and his mom’s large salary wouldn’t figure in the aid application.”
"Notably, the federal government has no way of knowing where a student is spending most of his or her time. "
This all just seems odd to me as she is basically advocating that a divorced family use a sort of “loop hole” and use the parent making far less even though the other parent will most likely be contributing majority. idk, do people actually do this and to any FA officers out there, do you guys look into divorced families and see who actually lives with who or is this loophole known to you guys as well?
It’s not all that advantageous. Big deal…the kid would get a $5775 Pell Grant…max by doing this.
I’m betting the child of a physician would likely apply to colleges that require the Profile, and non-custodial parent information.
For FAFSA only schools…like I said…but deal…$5775 is the max Pell, and the student would get a $5500 Direct Loan…the student would get the Direct loan anyway…even if the parents are married.
No surprise…and yes, many do fib about where the child is mostly living to get a Pell Grant. It may only be up-to-$5800 but it’s money they don’t have to pay…times FOUR YEARS times the number of kids they have. If the couple has 3 kids, then a full Pell grant for 12 years is $68,000…that’s not nothing…that’s can be the cost of 2 or 3 new cars.
Of course, for this to work, the parents need to both physically live near the children’s school.
NO ONE IS checking how many nights the child sleeps where.
It is very easy to make it work if the parents know how to do it. Make sure the child actually DOES stay with the lower income parent for more nights. Usually we’re talking about a 17 or 18 year old high school jr/sr, so they can get themselves from one house to the other. Child support paid through a court register is harder to ‘adjust’, but in other cases the child support can be creative. The higher income parent provides housing or a car for free. Nothing is paid on behalf of the family, it’s just provided free or very low rent. This would take a lot of coordination. If the low income parent can file a 1040A and the income is below $50k, child support received will not take the fafsa above $50k and it should be simplified asset reporting.
Honestly, most former spouses don’t get along well enough to rig the system.
Talk to any family law attorney and they will tell you that the extreme outliers are the ones who can get it together enough to take advantage of this “loophole”.
The typical divorce- whether affluent, middle class, or below… someone gets it in their head to “get back” at the other party. The assets get blown up by legal fees and extraneous filings. Not enough communication to even figure out who gets the dog let alone to collaborate on who stays where to max out on aid.
Most of the divorce situations I know about have the kids as the victims. I’m not sure this “problem” is widespread enough to worry about.
I agree that many divorrces have a lot of acrimony. But, I’ve seen cases where the divorce happened long enough ago that some of that has died down enough for the parents to figure out that using low-income Parent as custodial to avoid higher income Parent’s info.
In Calif, where the CSUs and UCs only use FAFSA, it is not an unusual thing to do because it can make the difference between “free tuition” and more (thru Cal Grant, Blue and Gold, and Pell), and paying full freight.
I also don’t think it’s used much. Maybe in some cases where the custody issues weren’t acrimonious and the lower income parent actually is very involved and present enough that it’s a toss up anyway whether the child lives with that parent more than the other.
Well the thing is, multiply that pell grant by 4-5 years and that is over $20,000 in funds plus the student would probably be receiving loans at very low interest rates they wouldnt have been given, and a work study option and other aid given directly from the school. Idk, i’m just saying that with a 50% divorce rate this could be used more often than people think.
But most of the fraud cases seem to be fraud rings and or cheating on taxes, as I am sure this divorce thing would be extremely hard and time consuming for schools to fully investigate.
What if the parents live far apart and one parent lives closer to the high school the child attends, wouldn’t that suggest that that the child lives with that parent? What if the child goes to a doctor closer to one parent’s home and that parent repeatedly pays the copays for the child, buys most of the day-to-day items like clothes, food, school supplies, etc.?
Well the rules are that the child must live with the parent for majority of the year or the parent that gives the most money to the child. They are somewhat vague in my opinion
FYI school teacher dad making $50k unless he also has other kids that he is taking care of or in college is not getting a $5815 PELL Grant. Maybe a few hundred $$ but not a big amount of money. FWS is not guaranteed.
most of the big institutional aid will request the income/assets of all parents either on the CSS profile or their own institutional forms
Every student that has a financial need is entitled to a subsidized loan.
Also, the child’s home situation is indicated in the recommendation letter, including who the child lives with and the level of participation provided by the non custodial parent.
As others have stated the FAFSA based on custodial parent income is not going to yield a lot of money. For state aid (NYS tap, they will look at income of both parents especially if the custodial parent is not filing the student on taxes).
ALL students who complete a FAFSA are eligible to receive the Direct Loan amounts. ALL, there is no low income requirement for those.
The only guaranteed aid that a lower incime student would receive is the amount of a Pell Grant to which the are entitled based on their FAFSA EFC.
The thing is…unless this student is a attending a community college, the full Pell, plus the full $5500 first year Direct Loan would not be sufficient to pay the costs.
There are quite a few schools where the tuition is under $10k for state residents. If the student had room and board figured out, the Pell and loans could be enough to cover the tuition, fees, and minor costs.
The EFC does determine if the loans are subsidized or unsubsidized, so another plus if the family can get the income of one parent down to Pell qualifying levels.
I guess if the student was planning to live with his less wealthy parent and commute, this could work financially.
But if the student decides to live with the parent with the greater income while in college…aid for the following year would be affected.
In addition, the lower income oarent would need to also have room for,this student in their home.
And lastly…does lower income parent live in the same high school area where the student will graduate from HS ? If not…that could also raise a red flag.
@mommdc since only one parent’s info is provided, they have no idea how close or how far the other parent lives to the school.
[QUOTE=""]
@thumper1
Is this REALLY worth it for a $5775 Pell Grant
[/QUOTE]
In some cases, it’s more than that. In Calif, it can mean qualifying for a Cal Grant. So add a Cal Grant (free tuition) plus 5800…and multiply by 4 years…and then multiply by the number of kids you have.
But even those not living in Calif (or a state that has its own aid), a savings of $5800 could mean most of the instate tuition at a state school.