College loan quandary: When parents are divorced, who files for aid?

Q: My daughter is applying to private colleges. Her father and I are divorced. I earn $60,000 a year and he earns more than $100,000. However, he is not willing to pay more than $3,000 a year. Will it help if she files for loans and financial aid with me as the primary parent? With his income being so high, will she qualify for any aid?
A.U., via e-mail

A: Figuring out who needs to file the financial aid application doesn't have to be confusing. By law, the "custodial" parent must complete the Free Application for Federal Student Aid (FAFSA) form, say Gen and Kelly Tanabe, authors of Sallie Mae's "How to Pay for College." The government defines "custodial" as the parent with whom the child has lived with most during the past year.

If your daughter has lived an equal amount of time with each side, then it is the parent who has provided the most financial support over the past year. Usually, this is the parent who claims the child as a dependent on his or her tax return.

The good news, say the Tanabes, is that the federal financial aid formula will only look at the custodial parent's income and assets - although it does consider child support and alimony received. So if you're the custodial parent, then you would be the one to file the application, and only your financial information would be evaluated when determining financial aid.

To help get an idea of how much aid you can expect to receive, use the free online Expected Family Contribution (EFC) calculator at www.collegeanswer.com. The EFC is the amount that the college expects your family to contribute to your daughter's education. Using this tool, you can plug in different numbers and see how changes to your finances affect the amount of financial aid that your daughter may receive.

Finally, since your daughter is applying to a private college she will probably have to complete the CSS/PROFILE (http://profileonline.collegeboard.com) application to qualify for college-based aid. While federal financial aid only looks at the custodial parent's income and assets, private colleges may want to know about your ex's finances, too. While this does not affect your chances of receiving federal aid, it may impact your ability to get money from the college. Therefore, it is important to also include a letter explaining all the details.

"Be honest and upfront with the college," say the Tanabes. "You may be surprised at how helpful the college can be once they understand your situation."

Q: I am trying to get a handle on my debts. How can I find a reputable nonprofit credit-counseling agency to help me consolidate my debt?
J.S., via e-mail

A: Nate Wenner, a certified financial planner in St. Paul, Minn., says that he's always had good results when referring clients to the local outlet of Consumer Credit Counseling Service (CCCS).

"They are a true nonprofit organization," says Mr. Wenner. There are about 150 CCCS offices scattered across the country. You can find one by contacting the National Foundation for Credit Counseling at 1-800-388-2227, or www.nfcc.org. You might also contact your local Better Business Bureau for references.

While many reputable services exist, there also are a lot of charlatans. Ask a lot of questions upfront about payment for services and the agency's sources of funding, Mr. Wenner advises. They should not be asking you to make more than a token payment to them every month for their assistance; anything more should be a tip-off that they're in it for themselves, he says.

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