<p>I am not sure what is meant by "gaming the system". If you mean doing things that are legal to get the most that the system can give you, that is good financial planning. If you mean cheating and lying, it means exact as Chedva says. There is also a whole gray area where you can do things that fall in between and take the risk that it falls into either of the two categories. Those range from submitting false data that cannot be proven or unlikely to be questioned, to doing manipulations that so that you are within the letter of the law but it looks as fishy as a lagoon. When you get into that area, you take the risk of being questioned, hassled, and end up being penalized, then having to fight it. May not win either. So that whole area is not something that I would want to address. I would talk openly with the financial aid office if you fall in that situation, maybe anonymously first and then get an official answer even in writing if they support you in interpretation.</p>
<p>The definition of custodial parent and dependent is very different for FAFSA than it is for the IRS, according to court documents, for state residency requirement (depending on states) and in actuality. The primary determinant (and they make this clear in their literature) is who the child lives the most during the 12 months prior to FAFSA filing. I know many situations where children lived much more with the parent who is not spending the most money on them, is not the custodial parent by court papers, is not the parent who is going to be able to pay for the college, and is not the official address for all mailings. All that is supposed to count for FAFSA purposes is that the child is living with that parent which leads to some really crazy situations. A child in the situation that I just described can certainly get federal aid if that custodial parent by FAFSA definition meets the financial requirement, even if she's Donald Trump's daughter. It can also be to the family's financial disadvantage if the child ends up living more with the parent with more resources even though court papers, IRS dependency, official address. parental involvement in the child's life outside of home show that the less well heeled parent is custodial. In high school, especially these arrangements can occur for expediency and convenience sake, for instance, if the school and activities are much closer to the parent who does not have the care and custody. I see this all of the time. My high school senior spends very, very little time at home. He comes home late from athletic practices and events and is gone weekends. Where he predominently sleeps would be where he lives the most . Now, in our case we are not divorced so there is no issue, but he has friends with a custodial parent in NYC and the other in the suburbs where it would be difficult for anyone to say where the kid lives the most in a given period of time. Especially if they are away for the summer or find a job without consideration to which parent is custodial. You can all see this gray area. So in cases like that, it is smart for FAFSA purposes for the custodial parent by their definition to be the one that will qualify the child for the most money, and may not take much adjustment in scheduling, or maybe manipulation, to get that end result.</p>
<p>You see FAFSA is screwed up. Someday I'll post a list of the contradictions and idiocies of the form. This custodial parent thing is one example of their vagueness in definition that leads to such gray areas. It can even lead to outright contradictions. A child can be double counted as a dependent on FAFSA, for example. It makes no sense and it smells like fraud but it is not. It is the letter of the law. If your child is pregnant at the time of filing, she is not a dependent even if she ends up not delivering the child. </p>
<p>There is a whole website that goes into divorced and separated parents and what the financial aid directors are told to do in looking for fraud. If you google those things, you can find it. I'll try to get that link for you. What is more important to them than who is the custodial parent is how much money is given in terms of support for the child which is another gray area. You see the custodial parent has to show income. Child support and other monies given for the benefit of the child by the non custodial income is supposed to be shown in that parent's income. I can tell you 100% that this is something that the govt and FA looks for. If they see a very poor custodial parent getting nothing for child support, and sniff a well to do non custodial parent that is a red flag. So a kid in boarding school for instance with the non custodial parent paying the tab, is going to have to show those payments in the FAFSA. A parent cannot "gift" things to the kids in this case. And support is not the IRS or court ordered definition. It's what you are actually paying just as the living there is the actual time spent. That can make it non worthwhile to stick the kid with the poorer parent for aid purposes.</p>
<p>I don't know a single person ever questioned about who was the custodial parent. They don't seem to care about that. BUt I know LOTS of parents hauled with requests for bank statements about how much money is exchanging hands in that child support question. </p>
<p>I am no expert in this. Just an amateur parent who is going by anecdotes, so please do not take this as gospel. It is my take on the situation, and I am being as honest and thorough as I can, but am not a FA counselor, accountant, or IRS agent.</p>