With the increasingly high cost of tuition, financial aid has become a necessity for many students. What many students may not know is that the amount of financial aid they receive may vary depending on whether their parents are married or divorced. In the case of divorced parents, only the parent with primary custody is required to fill out the Free Application for Federal Student Aid. The FAFSA does not include the noncustodial parent’s income or assets in any calculations it makes regarding a student’s financial aid package, even though the incomes of both married parents are fully taken into account. Such a policy regarding divorced parents allows potentially higher income students with divorced parents to get more financial aid than they would otherwise be able to if they had to show both of their parents’ incomes. The FAFSA’s approach creates a system that illogically distributes financial aid in a manner less based on financial need and more based on the marital status of a student’s parents.
While the FAFSA tends to be the primary financial aid application for those attending public universities, many private schools require students to also fill out the College Scholarship Service Profile in order to receive financial aid. Unlike the FAFSA, the CSS Profile requires the noncustodial parent to fill out their financial information and uses this information in calculating each student’s financial aid package. Private universities have repeatedly justified including noncustodial parents in financial aid calculations, with Harvard University stating that “both parents have an obligation to support you, and a divorce or separation does not change that obligation” and Pomona College affirming that “parental responsibility for educational costs does not cease upon divorce or separation.” Married and divorced parents should be considered as equally responsible for their children, and it does not make sense for FAFSA to assume otherwise.
By only requiring the custodial parent’s information to be included in financial aid calculations, the FAFSA creates an economically flawed system. The FAFSA’s current rules for divorced parents go against economic research which proves that the most effective “marketplaces need to … make it safe to participate in the market as simply as possible” by providing all necessary information for the market transaction to take place. Any attempts to hinder such an open market are said to “reduce overall welfare” of market participants. Because it only requires the custodial parent to apply for the FAFSA, the FAFSA is essentially creating a type of market failure known as information failure. In a market with information failure, the market does not “provide enough information…during a market transaction.” In the financial aid market, omitting the financial information of the noncustodial parent prevents universities from having enough information to judge a student’s financial need correctly. This is why Time magazine argues that “[s]tudents whose parents are divorced … will in many cases be in line for a more generous financial aid package.”
Some noncustodial parents are completely uninvolved in their children’s lives, and there is concern that including the financial information of those parents would be unfair to students with divorced parents. In situations like this, the CSS Profile has a waiver that students can use to petition to only include their custodial parent’s financial information in financial aid calculations. A similar waiver could be included in the FAFSA.
The FAFSA needs to be restructured as to require the financial information of both divorced parents. Such a reconfiguration would allow public universities to have a more accurate picture all of its students’ financial need and enable them to distribute financial aid in a more justified and equitable manner.