by Dr. Margorie Engel, 2000

College expenses - $6-8,000 per year at a public university and more than $20,000 per year at many private schools are a predictable issue that arises without regard to the length of marriage, extent of finances, or stage in step family development. The costs are fraught with emotional overtones in addition to practical realities. And you are not alone; almost half of the financial aid applicants are members of a divorced or remarried family.

The two guiding principles of financial aid are:
-The family bears primary responsibility for paying college costs - financial aid is considered the “last dollar” into the mix of resources, and
-The majority of financial aid is awarded on the basis of need, not merit.

The quest for financial aid begins by filling out the “Free Application for Federal Student Aid” (FAFSA). It must be used for distribution of federal aid and is used as a “starting point” for virtually all other kinds of financial aid.

Federal and State Financial Aid
The federal government is the largest provider of financial aid of all types including work-study, loans, and grants distributed on the basis of need as determined by the FAFSA form. Unable, not unwilling, is the operative word when considering eligibility for federal funds.

State aid comes almost entirely from federal funds and is awarded only to residents of the state. Residency requirements vary and most state grants are need-based, although an increasing number contain a merit component.

For purposes of determining eligibility for aid, federal and state programs define “family” as the student’s custodial unit (parent with whom the child lived most for the past 12 months), including stepparents, and will require financial information from both the custodial parent and stepparent. Applicants may not exclude stepparent financial information, nor does the need analysis methodology segregate custodial and stepparent data in determining eligibility for aid. This holds true even if you keep your money separate and use the “Married, Filing Separately” form for tax returns.

The non-custodial parent’s financial information is not included in the analysis, nor calculated as an expected contribution - except as child support is included in the custodial parent’s income stream. Divorce and premarital agreements are also ignored on the grounds that the financial aid program is not a party to the agreement and is therefore not bound by its terms. Stepparents are highly visible they don’t have to be tracked down and no one has to be responsible for enforcing or amending child support court orders.

This financial liability exposure is not an equal opportunity for both stepfathers and stepmothers because the majority of divorced mothers have physical custody of their children. When mom remarries, stepdad is viewed as an available resource to keep children off the public dole - including federal financial aid for college. Since stepparents do not have a legal financial obligation for college expenses, this is really an illusion of another financial resource and makes needy stepchildren dependent upon the voluntary contributions of their stepparents.

College and University (Institutional) Funds
Colleges and universities provide the next largest source of direct assistance through scholarships, loans at favorable interest rates and terms, and other inventive aid programs. Each institution establishes policies for awarding its own aid based upon need and merit. Colleges have the potential and the opportunity to alter the federal assessment of your family’s ability to pay for college by supplementing information about extenuating circumstances.

Colleges and universities also start with the government FAFSA form and evaluation. After a student is admitted, assignment is made to a specific financial aid officer. At this point, the relationship becomes more personal. Financial aid officers have said, “Where we feel twice as bad is when the students say, “I’m not going to be able to afford to do this, so I’m not going to try” and we never have the opportunity to work with them.” The point is, they will work with you, so meet deadlines for admissions applications and financial aid requests.

The institution’s willingness to redefine the “family” is driven by their school budget. Schools might include the income and assets of the non-custodial parent. They cannot compel a non-custodial parent to contribute to college costs, but the student’s eligibility for financial aid can be predicated on the assumption that noncustodial resources will be available. On the other hand, these schools may also exclude the income and assets of the stepparent or require financial disclosure - and a contribution for college costs - from four parents (by including stepparents) if both biological parents have remarried.

Some of these “meet needs” schools will ask for a letter outlining extenuating circumstances. Others have preprinted forms. They usually meet with parents and student on the phone or through an on-site visit. Your “extenuated circumstances” claim will be evaluated based upon documentation. Make photocopies of relevant sections of papers such as IRS returns, divorce decree, prenuptial agreement, court restraining orders, and proof of financial losses.

Private Financial Aid
Private aid comes from foundations, scholarship organizations, unions, fraternal and civic non-profit groups, professional associations, religious organizations, and corporations. While they also begin with the FAFSA form, they make their own rules for distribution of aid.

Is College the Right Choice at this Time?
Start planning early. Real early.

Investigate the arsenal of investment and tax strategies: prepaid tuition plans, series EE savings bonds, zero coupon instruments, mutual funds, whole life insurance, and custodial accounts under Uniform Gifts/ Transfers to Minors Act or trusts.

The above admonitions are great advice to stepparents if the children are young. Even better advice to biological parents when the children are young or as part of the divorce settlement. Give that information to your married and divorcing friends.

You’re in a stepfamily. Chances are, college plans weren’t funded. You’ve filled out the FAFSA form and have prepared a list of “sound bites” to answer questions about extenuating circumstances. You know that this work does not guarantee financial aid - or enough of it. The price tag on a college degree can be intimidating. Now what?

Consider the reality that college is not for everyone. Only 20% of the U.S. population have college degrees. We all know the stories about kids who go through college, become business executives or bank VP’s and ultimately chuck that lifestyle and do what they really wanted to do in the first place - become master carpenters or run a successful boat yard.

Nonetheless, statistics support the economic justification for a college degree. Lifetime earnings are typically higher and the unemployment rate is usually lower. Basic skills in analysis, critical thinking, and effective oral and written expression enable college grads to cope with a rapidly changing world. To connect limited financial resources with the desire for a college education, consider a non-traditional sequence of events.

Delaying freshman year may make both dollars and sense. After six months or a year of employment, many companies fund the cost of courses and degree programs - on both a part-time and fulltime basis. As an “independent” student (after the age of 24), financial aid is no longer dependent upon an assessment of any parental contributions. Schools like to enroll “mature” students - who tend to have a greater appreciation for the educational process and its value. Because they like to have a diversified student body, a wider choice of schools may also be available for an older student.

If you’re determined to use the “traditional” timing - from high school senior to college freshman - there are steps you can take. Try to get the non-custodial parent involved in the choice of college so that parent will have a vested interest in contributing to the cost. If your focus is on federal aid, consider making the student’s “home” with the parent with the lower income in order to maximize the benefits from colleges which look only to the custodial family to assess need.

Don’t assume you can’t afford a particular college. Remember “professional judgment” available to private schools. Consider the service academies: West Point, Naval Academy, Air Force, Merchant Marine, Coast Guard and ROTC scholarships.

Look into schools with a Co-Op program. A four-year program typically takes five years to complete because classes are interspersed with paid employment that is not linked to financial need. Make arrangements for your student to live at home and be a commuter.

Do emphasize your child’s responsibility to work in the summer and during the school year - but don’t expect students to “work your way through school like I did.” Students on work-study programs earn an average of $5 an hour. You just can’t meet today’s cost of education on that Income.

Where the Money Will Probably Come From
Even families eligible for significant financial aid need to be prepared to bear a sizeable portion of the financial aid burden. This financial boost typically comes from grants, loans, and scholarships offered by the government and the school itself. Home owners may have the home-equity loan option. You might borrow against the cash value in your life insurance policy at a favorable interest rate. Some companies permit families to tap into their savings and/or retirement plan and repay the loan through payroll deduction. Also, ask the employee benefits department whether your firm makes college loans to employees.

Light at the End of the Tunnel
No part of this process can be described as fun, but completing the financial aid and scholarship forms may turn out to be the most profitable time you can spend. And, even though portions of this process will need to be repeated for each year that your child applies for student aid, take heart. Once students have initially received financial aid and have satisfactorily completed a year of college, very few are forced to leave because they desperately need money for room, board, and tuition.

Additional Hints:
To claim extenuating circumstances, be prepared to discuss and document:
-Who claims this child on their federal tax return?
-How long ago was the divorce/remarriage?
-What does the Divorce Agreement say about children and education expenses?
-What’s the financial status of the noncustodial biological parent, including a new spouse?
-Does the non-custodial biological parent have a subsequent family to support?
-Would circumstances such as abuse preclude involvement with both biological parents?
-Is there a Prenuptial Agreement?
-Is the custodial stepparent supporting parents or children from a prior marriage?
-Have there been significant financial losses?

Dr. Engel is an author, speaker, and media consultant specializing in families complicated by divorce and remarriage. She is president and CEO of SAA Families of the 21st Century (formerly Stepfamily Association of America).

SAA Families of the 21st Century (formerly Stepfamily Association of America)

-A national not-for-profit organization funded by memberships, sale of educational resources, and donations.
-An association of people working to help stepfamilies live successfully.
-A network seeking to change attitudes and educate society about step families through advocacy, media coverage, and solid research.
-A provider of education, training, and support for professionals and step families.
Join our important efforts to help all step families succeed and become healthy participants in society while enjoying the benefits of membership:
-Stepfamilies Stepping Ahead success program and book, free with membership.
-Subscription to our newsletter, SAA Families.
-Discounts on books and other educational materials.
-Discounts on professional training and conference fees.
-Access to members-only sections of our web site: www.SAAfamilies.org
-Information on local SAA chapters and referrals to our Professional Affiliates.
-Your e-mailed questions answered by stepfamily professionals on SAA’s Board of Directors.
-Satisfaction that you are contributing to a worthwhile cause.

For more information about stepfamilies:
Write to:
SAA Families
650 J Street, Suite 250
Lincoln, NE 68508.
-Call: (800) 735-0329.
-E-mail: SAA@SAAfamilies.org
-Web site: www.SAAfamilies.org