For students who come from divorced and blended families, applying for financial aid is often a confusing and frustrating experience. Colleges, the CSS Profile, and the FAFSA have struggled over the years trying to figure out how to treat blended families where parents have divorced and there is often one or more step-parent in the picture. Should they just take the biological parents’ financial information into account? Should they count just the custodial parent and their new spouse’s resources or the resources of the non-custodial parent and their new spouse?
Currently, children of divorced or never married parents must only list the income and assets of their custodial parent and that parent’s new spouse on the FAFSA. They do not have to share the financial information of the non-custodial parent’s income or their new spouse. The CSS Profile, however, requires that students share all information pertaining to both biological parents or step-parents. Colleges, meanwhile, can decide individually what policy they would like to use to address both biological and step-parent resources when it comes to doling out their own institutional financial aid.
The argument for including step-parents in financial aid calculations goes like this – step-parents’ income and assets add to the financial capacity of the household. If a parent therefore lives with a rich spouse, their own income will go further since they are sharing expenses with that spouse. That will mean that the parent will be able to contribute more towards college since the household will have more money available. While many people acknowledge that the step-parent might also want to contribute to the college expenses of their step-child, most justifications for their inclusion in financial aid calculations don’t assume this.
The problem is that there are a variety of different family combinations and a cornucopia of ways that financial obligations and expectations come into play when it comes to step-parents and their step-children. A wealthy step-parent might have required the parent to sign a pre-nuptial agreement, for example, or the household expenses might be shared equally between the step-parent and the parent despite income disparities.
Also, while the justification for including the step-parent’s income is supposedly because their contributions to the household free up the parent’s assets and income to be used towards college, the FAFSA and CSS Profile tend to treat the parents and step-parents’ income equally. Rather than looking at how the step-parents’ income might impact the parent’s expenses, it just takes this information and treats it as though the step-parent were the married biological parent of the child. Some step-parents might have no problem with that assessment and might look forward to contributing to help their step-child attend college. But not all of them will feel that way.
There is obviously a big difference between a step-parent who has been in a child’s life since they were four and one who married into the family six months ago. The one who has been around longer would likely be more willing to contribute to the college expenses of the step-child than the other. But the FAFSA and CSS profile treats these step-parents the same.
What likely often occurs in these situations is that biological parents have to take on a larger financial burden because of the step-parent’s income – whether or not they contribute. Even worse, a student could end up going deeper into student loan debt than they might have because a step-parent’s income disqualified them for aid that they should have received.
If a family doesn’t want the step-parent’s income to be considered, then they could wait to get married until after the student goes to college. But most parents don’t realize how financial aid calculations treat a step-parent’s income until it’s too late and they’ve already remarried. At that point, there isn’t much that they can do. Also, sometimes it’s not possible to wait to remarried and it’s also not fair to ask parents to put their lives on hold or to require their new spouse to undertake a larger financial burden during their children’s college years.
This isn’t to say that including a step-parent’s income always works to reduce financial aid. If that step-parent has college aged children as well and a low enough income, their inclusion on the financial aid forms could serve to get more financial aid for a student. But that situation is rare.
While I don’t believe that step-parents should be included in financial aid calculations, I do agree that their income and assets help the household in limited ways. But if they are to be included, their income and assets shouldn’t be treated the same as a biological parent’s income and assets. I believe another method of including step-parent’s income and assets must be found so that it actually measures their household contribution rather than unfairly expecting them to contribute at the same level as a biological parent and not taking into account the relationship that the student might have with the step-parent.