College expenses can be overwhelming to many stepfamilies. Consider these staggering numbers for a state-resident-undergraduate: $5,500 per year at a public university and as much as $37,000 per year at many private schools. Sure, it’s a predictable issue if parents have planned from the start to send their children to college. But, oftentimes, college expenses are one of the last complexities stepfamilies address. In addition, they arise without regard to the length of marriage, extent of finances, or stage of stepfamily development.
These skyrocketing costs are fraught with emotional overtones in addition to practical realities.

The issues are complex and weighty:
. How will I finance college for my child?
. Will my child qualify for any financial aid?
. What role does our stepfamily play in this?

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

That said, the quest for financial aid begins by filling out the application, “Free Application for Federal Student Aid” (FAFSA). It is used as a starting point for virtually all kinds of financial aid, including the distribution of federal and institutional aid.

It’s not surprising that the federal government is the largest provider of financial aid of all types including workstudy, loans, and grants distributed on the basis of need as determined by the FAFSA form. “Unable, not unwilling” is the operative philosophy when the government determines eligibility for these federal funds.

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

Federal Frustrations

For purposes of determining eligibility or aid, federal and state programs define family as the student’s custodial household (parent with whom the child lived most over the past 12 months). This includes 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 biological parent 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 usually included in the analysis, and is not 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 was not a party to the agreement and is therefore not bound by its terms. Conversely, stepparents in the custodial household 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 resource, and makes needy stepchildren dependent on the voluntary contributions of their stepparents.

College, University, and Private Aid Possibilities

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 collage by supplementing information about extenuating circumstances.

If you want to argue for extenuating circumstances, be prepared to document the following:
-Who claims the 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 non-custodial biological parent, including a new spouse?
-Does the non-custodial biological parent have a subsequent family to support?
-Is there a prenuptial agreement?
-Is the custodial stepparent supporting parents or children from a prior marriage?
- Have their been significant financial losses?

Colleges and universities also start with the government FAFSA form and evaluation. So, the first step is to meet the college’s deadlines for admissions applications and financial aid requests. After a student is admitted to a particular college, each applicant is assigned to a financial aid officer. At this point, the relationship becomes more personal.

The institution’s willingness to redefine the family is driven by their budget. Schools may include the income and assets of the non-custodial parent. They cannot compel a non-custodial parent or stepparent to contribute to college costs, but the student’s eligibility for financial aid can be predicated on the assumption that those 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 all parents (including stepparents if both biological parents have remarried).

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

Intimidating, Not Impossible

Let’s assume that the route we’ve described here just does not apply. Your child will not qualify for financial aid, but life changes have prevented you from planning adequately for the cash outlay required for the college experience. Now what?

Consider a non-traditional sequence of events. One option is to delay freshman year. After six months or a year of employment, many companies fund the cost of courses and degree programs - on both a part-time and full-time basis.

If a student waits until he or she is 24, his/her status becomes one of ‘independent’. In that case, financial aid is no longer dependent upon an assessment of any parental contributions. Schools like to enroll mature students; they tend to appreciate the educational process and its value.

If you’re determined to use the traditional timing for your child, there are alternative 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 having the lower income in order to maximize the benefits from colleges that look only to the custodial family to assess need.
- Consider the service academies: West Point, Naval Academy, Air Force, Merchant Marine, Coast Guard, and ROTC scholarships.
- Emphasize your child’s responsibility to work in the summer and during the school year, but remember that it is unlikely he/she will be able to meet today’s cost of education in this manner.
- Homeowners may have the home-equity loan option.
- Some companies permit families to tap into their savings and/or retirement plan and repay the loan through payroll deduction.
- You might borrow against the cash value in your life insurance policy at a favorable rate.

Tuition traumas are likely to occur no matter how much planning is involved. The degree, however, varies by how much planning was done and how early the planning began. Your best bet is to begin planning early. If you didn’t do that, start right now by exercising many of the options we’ve proposed here. Just remember, the obstacles may be formidable, but the rewards for your child are infinite.

Dr. Margorie Engel is President and CEO of the Stepfamily Association of America (SAA), and is the author of several practical, legal, and financial books and articles. She can be reached at engel@saafamilies.org. “Tuition Terror for Stepfamilies” is an informational booklet available from the SAA for $3.00. For more information about this booklet, planning for college expenses, and the stepfamily, contact the SAA at 800.735.0329 or via email: saa@saafamilies.org.