158. Divorce, FAFSA & College Planning – How to Get It Right

Welcome to WeChat Divorce, hosted by Karen Chellew, Legal Liaison and Catherine Shanahan, CDFA.

Each episode we sit down with divorce professionals and industry experts to provide insights and frank discussions about real people, real situations, and real divorce to help you achieve your best life post divorce.

0:43

I’m Karen Chellew, Co founder and legal liaison here at MD’s and your solo host for today’s episode.

At My Divorce Solution, we are on a mission to bring financial clarity to the divorce process because the better you understand your money, the better decisions you can make for your future.

1:00

Today’s topic hits especially close to home for so many of our clients.

Divorce, FASFA and college cost, how to get it right.

And when it comes to financial stress, few things rival divorce, except maybe paying for college.

1:16

That’s why I am so thrilled today to welcome Vicki Volweiler, founder and CEO of College Financial Prep.

I believe we’ve had one other podcast with you, Vicki, that was so well received.

Vicki and her team specialize in helping families, especially divorced and separated parents, navigate the complex, often overwhelming world of college financial planning.

1:40

She’s helped countless families maximize financial aid, reduce student loans burdens, and create a plan that supports their children’s dreams without derailing their own financial stability.

So, Vicki, thank you so much for joining us today.

Oh.

Thanks, Karen.

1:56

I’m happy to be here.

So happy to have you.

So before we dive into our questions, can you tell our listeners a little bit about your journey and what led you to focus specifically on college planning for divorcing families?

Let me just say this, I’ll start.

I have my MBA from Syracuse University.

2:14

I went on a full ride plus stipend.

They basically paid me to go for my MBA.

So you know, that in and of itself was great.

And then some years passed and, you know, like many of your viewers, you know, I went through a divorce and I decided with my divorce that, you know, the, the process financially, emotionally, all of it, you know, can be overwhelming.

2:39

I decided to become a divorce coach and I was focusing on the financial side of divorce, personal finance.

And clients started to ask me now how am I going to save money on the cost of college?

And really, my own kids were starting to get older and I was thinking about college.

2:54

And, you know, when one thing led to another and lots of research and, and lots of savings and, you know, my personal interest in in personal finance and, you know, my goal to, to help people with the divorce process.

This just seemed like a win, win with starting college financial prep.

3:11

You know, divorce can be awful.

It can be very expensive, but this is the one area where both parents can save lots of money.

It’s still possible for the student to go to their, you know, dream school or certainly school where they’ll have lots of opportunities.

3:28

You know, So I’m thrilled to be able to help people with, you know, reduce their emotional stress, reduce their financial stress, and that’s awesome.

And you know, from our vantage point, you are the go to person for this type of information.

3:45

It’s, it’s so important.

So let’s get right into it.

I’m going to start out with the, it may not be so recent now, but the changes with FAFSA that especially with divorcing family that can create confusion.

4:02

I know that a lot of our families are amending those applications because they didn’t really understand them in the first place.

So what are the biggest FAFSA updates or informations that our listeners need to be aware of and and how do those changes impact divorcing families?

4:19

So I believe you’re referring to the FAFSA Simplification Act and this went into effect a couple of years ago.

It used to be and most people still think that oh, it’s the custodial parent that completes the FAFSA application and that’s not necessarily the case anymore.

4:35

Right now, based on the FAFSA Simplification Act, it is the parent who provides the most financial support for the student.

That is supposed to be the parent who completes FAFSA.

Now, that’s not necessarily the parent who is paying child support.

4:52

It’s not necessarily the custodial parent.

You need, really need to get in there and, and determine who’s, who’s spending more to support the child.

You know, you, you can think about your, your personal budgets, what you’re spending on housing and clothing and, you know, food and extracurriculars and all of the different items to determine which parent it should be.

5:17

Now, just so everybody knows.

If.

Parents get remarried.

That parent then is also included on the FAFSA application.

And some people say to me, oh, but we file separately.

It doesn’t matter if you’re remarried, even if that new parent is not contributing a dime, it still counts and goes on the FAFSA application.

5:39

And you know, we’re talking about FAFSA.

But really there’s two main applications, FAFSA and then also the CSS Profile.

So FAFSA is administered by the government, CSS Profile is administered by the College Board, and there’s about two 5300 schools that require the CSS Profile.

6:02

So every school in the country requires FAFSA and then these additional schools require what’s called the CSS Profile.

And typically it’s the name brand schools that everybody’s familiar with.

It’s the, the IVS, NYUBU, Stanford, GW, the Emory, the the the typical brand name schools.

6:25

It’s mostly private schools, but there are a few public schools on the list too like University of Michigan, UNC, Chapel Hill.

So there are a few public schools also.

And I’m really bringing this up because those schools, most of them that require the CSS profile will also require a non custodial parent application.

6:50

So both parents will need to complete the CSS profile application.

And I’ve had instances working with clients.

Both parents are remarried.

Now we’re looking at 4 parents worth of income and assets.

So I’m bringing this up because, you know, in terms of strategic planning, it’s important to to consider everything that’s going to be required on the financial aid applications.

7:12

OK.

So with the FASFA, for those schools that are not the the schools that require the CSS or both parents, there’s always a discussion, Not always.

Most of the time there’s a discussion about which parent and does it matter relative to their income.

7:33

So because if one parent fills it out, they don’t fill out income for both parents.

Is that correct?

Right.

So the FAFSA goes by one household.

So whether the person is single or remarried, it just goes by the one household and it doesn’t necessarily go by income.

7:53

So I’m going to make up an example.

One parent can earn $200,000, another parent can earn $100,000, but the one that earns $100,000 is providing more financial support for the child then that parent would complete FAFSA.

8:09

OK, so then where does the conversation come from that you, your child would be eligible for more aid if the parent like making less money makes the application?

I’ve heard.

Well, that’s I.

Mean that’s true.

8:25

It is possible.

I’m not going to say it.

You know, every school uses a different formula.

So I can’t say definitively that that will happen.

But yes, I mean, in an ideal world, yes, it’s better to use the parent who earns less.

However, the guidelines say that it’s the parent who provides more financial support for the child, and that’s the one that becomes FAFSA.

8:48

And that’s really, really important.

So some states do require parents to support their kids through college as part of the parenting plan or custody agreement.

Most states do not, but I find that most parents that we’re working with, they definitely want to negotiate how college will be paid.

9:09

So they have their 529 plans.

When do they come into play?

And so that discussion about who’s providing more support needs to be part of that conversation, not just an agreement about who’s going to apply for FASFA.

9:26

That’s really good information.

Yeah, definitely.

And you know, lots of parents are always asking about that.

And it’s important to consider the financial aid applications with each of the schools even when developing the college list because, you know, just planning ahead.

9:46

Yeah.

So it’s definitely important to think about.

Yeah, well, I feel like during the pandemic there was a lot of money available, whether it was from the government or from scholarships.

It’s so different now.

Am I correct?

Yes, So I mean, the schools at the time were spending lots of money and, you know, to make sure everything was safe.

10:10

And at the same time, they had canceled lots of programs they had sent.

I mean, my own son was impacted with this.

You know, they sent kids home, kids were online.

They closed down summer camps that they had on campuses and conferences.

So the colleges, their own revenue streams weren’t even there.

10:28

So yes, they have a lot less money to work with.

That’s not to say that money isn’t available.

I don’t know if, I mean, there’s some schools.

Let me just say this.

Schools are businesses.

They need to fill seats.

If your child is going to a school that isn’t filling all their seats, there may be more opportunity to get more money from them so that you do go to that school.

10:55

Yeah, then your child does go there, so.

Vicki, do you have a perspective on when to use a 529 plan versus loans?

I know some financial planners take a position on that.

11:11

I don’t know if that’s something that you work with as well.

So I was working with a client yesterday and we were discussing this very topic.

And my recommendation to them was to use the 529 plan now when the students going into their freshman year.

11:28

Because when you take out those student loans, the unsubsidized student loans, they start accruing interest right away.

So by using the money from the 529 now and putting off taking the loans till a future year, there’ll be that much less interest occurring.

11:47

OK, good point.

Thank you for that.

So let’s move on.

When should divorcing parents start thinking about college?

You know, my opinion is divorcing parents should think about it when they’re getting divorced and start planning then.

12:03

And, you know, the, the child could be 3 years old, but I, I think it’s important to consider, you know, if both parents went to college, what type of, what types of colleges they went to, what are their hopes and goals for their child.

And obviously, if the child is 3 years old, they may have other ideas as they get older.

12:21

But I, I think it’s important to begin the discussion and to, to think about it and at a bare minimum to include in their divorce agreements that both parents are willing to participate in the financial aid process.

12:37

That doesn’t mean that they’re sharing information.

But like I mentioned earlier about the CSS profile, you know, what if the child wants to apply to one of those schools and the school requests information from both parents, if both parents don’t participate, the child’s not going to get anything.

12:53

So it’s really important for both parents to be willing to participate, even if they’re not both sharing in costs.

Yeah, that’s so important.

And I’m glad you brought that up because I was thinking early on when you were talking about that, well, what if one parent just goes missing or refuses to participate and it’s not in that divorce agreement that that’s a big deal?

13:17

And those types of pauses, while they may, you know, seem innocuous, that’s a lot of money that would be available to the child that they otherwise would not have if that wasn’t covered.

So that’s really good information.

You know the other thing you mentioned?

13:34

You know, what if, what if one parent refuses?

You know, there are instances where here I’ll tell you about a, a situation.

I, I had a client, there was domestic violence.

It was, it was a, it was a big deal.

Police reports all of that.

13:51

Anyway, due to the situation and the, the gravity of the situation, we were able to file a non custodial parent waiver.

This is not well, he’s just refusing to participate.

It’s not like that.

But you know, if the situation is much more serious, it is possible to request that the other parent, you know, their, their financials not be considered up to each school at whether they’ll grant that request.

14:20

But but it is possible to ask.

Yeah, I remember this past year, last summer I believe it was, people weren’t really sure of what financial aid was going to be available to them and everything was last minute.

14:37

Was that something you were experiencing with your clients as well?

It was very stressful.

So it was all part of that fastest simplification act.

There were lots and lots of delays.

The government was delayed in making the form available to everyone.

14:54

The government then was delayed in.

So when you submit the form, it goes to the government.

The government was then delayed in taking those FAFSA applications and forwarding them to the colleges.

Because that was delayed, the colleges had less time to notify people of what their awards were going to be, and then there was less time for people to make decisions on where the kids were going to go to college.

15:16

And there was just this ripple down effect and and people were just scrambling.

So, yeah, schools were making, you know, they knew that they got families knew that the kids had gotten into schools, but they didn’t know what their financial awards were going to be yet.

And some of them had to make decisions on what school without knowing what, what financial aid was going to be available.

15:37

So fortunately that seems it’s been a couple of years now, things are, are streamlined.

It seems to be working.

You know, I, I’m not really going to get into this big beautiful act.

But one thing I did see is that so from the FAFSA Simplification Act, they started including the net worth of for self-employed people, their business on the FAFSA.

16:04

So one of the things that I believe that I saw is that they’re going to, I believe take that away.

So, you know, interesting that they’re going to make a change to the FAFSA Simplification Act after, after everything that all the changes that have gone through.

16:20

Yeah, my goodness, I already have getting a flurry of emails of all of the updates and revisions to software that are being made for the the bill.

And yeah, it’s it’s always more changes and that we all have to just be in the know and aware of for sure.

16:37

So, OK, thank you for that because I watched that happen and that was very unnerving because you know when you it’s great that kids got into college, but then when they didn’t know, when the parents didn’t know the bottom line, that’s very stressful.

And this is also one of the changes that people should be aware of.

16:55

And it’s not specific to divorce, but to any parent.

It used to be that if a parent had more than one child in college at a time, so say somebody has twins, say somebody just has, you know, two kids that are in college at the same time.

They used to assume that you can put half towards each college education, but the fastest simplification act now they assume that you can pay in full for the two children.

17:21

So yes.

So even with that, it’s important to be strategic what colleges to apply to because some are more lenient about that than others.

OK.

Good to know.

Very, very good.

So on that note, from your experience, what colleges or types of colleges are most generous with AID, with or without 529 plans, I guess or yeah.

17:47

No, no, no.

Yeah, ignore the 529 plans, the most generous.

So this is hard to say.

I’m a big proponent of honors programs.

Yeah.

And the reason that I’m a big proponent of honors programs, especially if families, households are looking to save money, is that the honors programs they, they off first, they offer a lot of merit scholarship money, typically priority housing, priority registration, their own like living and learning communities, networking opportunities, you know, more opportunities on campus like working in the labs.

18:24

I think that they’re great programs and they’ll save a lot of money and those types of programs, your student does not need to be a four point O student or have a 1600 on the SAT.

They have honors programs at all different level colleges.

So I think that’s a great way to save money.

18:40

They are available at in state universities, out of state universities, private universities, all of that.

You know, that said, a lot of kids, my experience, a lot of kids, they want to go to an out of State College just because it’s not in their own state.

18:58

One public university still going to offer basically the same types of classes and as another public university.

So when finances are an issue, I’m always going to recommend in state over an out of state public university.

When we get to private universities, it is possible for a private university to cost ultimately cost the same as an in State University, but you have to be strategic in which schools you’re applying to, to do that.

19:25

And I’m going to say this, if your student is, you know, applying to the Ivs, they will typically meet 100% of need based aid.

Nobody is going to get a merit scholarship to go to the Ivs.

They’re all that bright.

19:42

But but but if a household has a lot of need, certainly the Ivs will help out.

Oh, that’s good to know for sure.

So interestingly enough that I don’t think I realized what you’re saying about the honors program, even though two of my children utilized them.

20:01

The my first child, she’s much older now, so she went in the honors program and they gave her a scholarship.

And she didn’t get the one she wanted, but they were willing to negotiate for a higher scholarship if she wrote an additional paper or or kind of pleaded her case in a different way.

20:25

And I think a lot of people don’t realize that you can assert, I don’t know, a request for a higher scholarship if you believe that your child or your child believes that they would be eligible for that.

So that’s, that’s definitely part of the process that I use, you know, a college financial prep with my clients.

20:46

Yeah, we’ll, we’ll file appeals based on, you know, changes in circumstance, you know, maybe there’s a divorce, maybe there’s a job loss, maybe there’s some financial thing going on.

But also if the if say the child receives a better offer from another school, it’s possible to request additional funding.

21:04

So definitely that’s that’s part of the process.

Yeah, and I think a lot of people don’t know that.

And she stayed in honors throughout her undergraduate years.

My son, on the other hand, he did get into an honors program, full scholarship, but about halfway through, he dropped out of honors for a variety of reasons.

21:24

And I think some people are very tentative about getting into the honors because of all of the specialties and they, you know, they, I don’t know, they’re tentative.

Maybe it’s going to impact their social life or their sports active, whatever the IT may be.

21:41

And it didn’t seem to affect anything.

When he came out of honors his junior year, he switched majors and for whatever reason, he chose not to stay in the honors community.

So I think it’s helpful for people to know that as well that it’s not, you don’t have to stick with that commitment.

22:00

And is that your experience as well?

Well, my experience is certainly kids change major it.

It’s normal.

You know, I, I, I remember, you know what, you know, child wanted to be one major while they were senior year of high school.

22:18

They changed their major freshman year.

They changed their major sophomore year.

Again.

I mean, it’s normal.

You can’t necessarily expect 18 year olds to know what they want to be for the rest of their lives so.

True.

That’s so true.

So I always say explore everything, take what you can get and continue to move forward, right?

22:34

Definitely, you know, that’s what those core classes are for, you know, for the kids to explore different areas, see what interests them.

Yeah, absolutely.

Wow.

A wealth of information.

So we’re going to move on to take away.

22:50

So what would you want all the parents listening or even children listening today?

What What are some takeaways that you want people to know when they’re divorcing and they have children either young or older, relative to college preparation?

23:06

I want them to be proactive.

Plan as soon as you can start planning.

There’s clients that I’m working with now divorced, one of them is remarried.

The child is going to their dream school and they are literally both parents are saving a combined $200,000 on the cost of college.

23:25

Is that going to happen for everybody?

No, I’m not going to promise $200,000 for everybody, but it is possible.

So don’t, don’t put your head in the sand because you don’t want to deal with money.

It’s that with planning, so, you know, generating the right college list, taking care of the financial aid applications, making sure they get in by the due dates, filing the appeals, scholarship searches, you know, and student loans if you need it.

23:52

But you know, we, we go through the process to make sure to save you as much money as possible.

So, you know, definitely allow time to plan because those are the those are the the families that save the most money.

Yeah.

And you know, what you provide is so important and I think so many people don’t even know about that.

24:13

So thank you for joining us today and for the very important work you do.

And I know that you have a book coming out, you announced that.

But can you talk about your book and also workshops or how people can find you and start to learn more about what you have to offer?

24:29

Sure.

Thank you.

So my website is www.collegefinancialprep.com and on the website there is a link for anybody who wants to schedule a free 15 minute call to learn about the services we offer and how we can help you.

24:48

I do have a book coming out that’s specific to divorced and widowed parents and college planning.

There will also be after the book a an accompanying workbook.

So there’s also online courses, online information about our one-on-one services.

25:06

And then I’m looking forward to having a book club to go along with the book so that way we can all work through the process together.

Love it, love it.

And what an incredible resource for sure.

So to our listeners, if this episode resonated with you, like and subscribe so you never miss an episode.

25:24

We’d love to hear your questions.

We may discuss them in a future episode. e-mail us at WeChat at ck11.net or visit us at minddivorcesolution.com.

Remember, knowledge is power and you’re stronger than you think.

Thanks for listening.

25:40

Thank you for being here today, Vicki.

Really, really good information.

We’ll see you next time.

Thanks for joining us on another episode of WeChat Divorce.

We hope this episode was informative and supportive on your divorce journey.

If you're looking for more support for navigating divorce with confidence and clarity, head over to azure-emu-499854.hostingersite.com/ for more podcast episodes, divorce events, and resources for your divorce.

26:08

We’ll see you back here for our next episode.