This question highlights a major area of confusion for many families of college-bound students. The confusion is well-deserved. There are significant differences in how divorced or separated parents' resources are considered in the two main methods colleges use to calculate a family's financial aid eligibility.
The two methods are the federal methodology (FM) and the institutional methodology (IM).
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Federal Methodology. The FM is used to determine eligibility for need-based federal aid. It's also used by some state aid programs and most colleges to award their own financial aid funds. The FM is calculated using information provided on the FAFSA (Free Application for Federal Student Aid). |
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Institutional Methodology. The IM is used by some colleges in addition to or instead of the FM to allocate the college's own aid. The IM is calculated using information provided on the CSS/PROFILE form or a form supplied by the college. |
With both methods, the parent considered the custodial parent completes the form and provides any supporting documents, such as tax returns. (Usually this is the parent the student lived with most during the past year.)
The FM asks only about the custodial parent. The IM asks the custodial parent to report any money the non-custodial parent is expected to contribute. Depending upon the college, the non-custodial parent may be required to complete a separate form providing more detail about his or her household circumstances, income, and assets. Supporting documents, such as tax returns, may also be requested.
Under both methods, child and spousal support are counted as income for the parent that receives them, and child support is subtracted from the income of the parent that pays it.
FM vs. IM: Whose household & financial information are considered?
| Methodology | Custodial Parent | Custodial Parent's Spouse (if remarried) | Non-custodial Parent | Non-custodial Parent's Spouse (if remarried) |
Federal
Methodology | YES | YES | NO | NO |
| Institutional Methodology | YES | YES |
YES
Custodial parent is asked to report the non-custodial parent's expected contribution to the student's college costs.
May be required to provide more detailed information on a separate form, depending upon the college.
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In general, colleges using the IM consider it the responsibility of both parents to contribute to their child's college costs. Some parents do not share this perspective and refuse to contribute. Colleges do take individual circumstances like this into account, so be sure to advise the financial aid office of any issues or special situations.
It's important to keep in mind that each family's situation is different and there are many variables that affect financial aid eligibility. Also keep in mind that unlike FM, IM is not a set formula. Many IM colleges adjust IM according to their own policies. For more information about a college's financial aid policies, check the college website and follow up with the financial aid office for clarification.
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