Divorcing is never easy when you have children and you need to split childcare costs, but it becomes even more complicated when you start planning for their college education.
There are so many issues here, but none of them should prevent your children from being able to go to college, so here are the four most important things to know.
Things Divorced Parents Should Know About College Expenses
1. Start negotiating immediately.
Couples often prioritize the custody agreements during a divorce, and that’s of course very important, but the problem is that it often neglects the discussion of college. The best approach is to negotiate everything right away, and it can be revisited later but at least the foundation will be in place.
In fact, some lawyers may not even address the issue, and it can cause problems 10, 15 years later when your kids are thinking of applying and you’re not even in contact with your ex-partner. If there is no legal binding agreement for the other partner to contribute, you may be stuck with the whole bill for college.
2. Start a secure college fund.
If you’re saving money for your children’s college, place it in a secure fund so it cannot be used for any other reasons. If your college savings are earmarked but they’re in a regular account, they can be used for anything, from paying for divorce attorneys to legal fees mandated by the court. It’s important to specifically ask your attorney to lock down some assets and make sure they’re protected for your children’s education.
Pauline Henderson, a college counselor at Big Assignments and Boomessays, has said for many years that “parents should also be doing everything possible to avoid a drawn-out, combative and expensive divorce because the people it will affect the most, not only emotionally but also financially, are the children. Consider looking into financial tools for divorced couples, because there are a few excellent ones that exist now.”
3. Address college expenses in your separation agreement.
Once the parents have negotiated and discussed college expenses, it’s important to specifically mention them in the marital separation agreement. There are a few different ways that this is done by other couples. Here are some common options here to keep in mind:
- 50-50 split: This is a very common approach when both parents have similar backgrounds and education because they both value the importance of post-secondary education. It’s also common if there are enough relatively even income and assets on both sides.
- Proportional split: This is a similar arrangement to the 50-50 split except that it’s proportional to income, so it takes into consideration if there’s a major disparity between both partners’ income. As long as both are able to financially contribute, this is a good option to agree to for couples with different incomes.
- College savings account: This option was discussed in point 2, and relies on parents contribution specific dollar amounts or proportions of their income into a savings plan as opposed to agreeing to pay portions of college expenses. These funds would go into college saving plans or custodial accounts.
- Dedicated asset: A dedicated asset can be used when instead of dividing all assets during the divorce, the parents might create a joint asset for college funding. This can include transferring a stock portfolio into a trust to fund the college education for their children.
- Agree not to obligate: According to Chantal T. White, an educator at AustralianHelp and Academized, agreeing to obligate “happens in certain cases where parents can commit to contributing to their children’s education to the best of their ability. If a parent is not financially secure, they should not obligate themselves to pay for college, but they can leave the door open for the discussion in the future. You, as a parent, can even include provisions to negotiate details at a predetermined date in the future.”
4. Decide who fills out aid requests.
Divorced families should also have important discussions about financial aid applications for their children. For example, the application for student aid that is granted federally only details the income of the parent at the child’s primary residence and also includes the income of the stepparent if applicable. If the child resides equally at both parents’ houses, the parent with the lower income should be the one filling out the application.
Unfortunately, the reality is that sometimes one parent will commit to paying the fees but the ex decides not to. For example, if two parents make similar amounts of money, one may choose to fill out the application forms. That parent will also pay for college expenses out of a college account, that the ex only sometimes puts their share in, even though a 50-50 split was decided.
Even though that’s what is in the agreement, it never comes out quite equally, because one parent will always have unexpected purchases, or one parent will find a cost unnecessary (for example, a meal plan or furniture for a dorm room). The important thing is achieving a good enough balance instead of trying to reach perfection.
As a parent who ends up spending more than the other one, you can make a big deal out of it, but that often ends up being more hassle than it’s worth. It would include going back to attorneys and maybe the courts, and that is more money out of your pocket that could be going to your children’s college degree.
It’s never an easy situation when parents are divorced, but it’s important to have this discussion early and lay the groundwork so that by the time your children head to college, you already have an idea of how it’ll be financially possible. Of course, it’s possible that either of your financial situations change between now and then, but the important thing is to have already started a dialogue that can be continued down the road.
Aimee Laurence, an educator at Case Study Writer, writes about college finances for her readers. She is aware of the complicated situation of many families who want to send their kids to college but can’t afford to, so she has many tips and tricks for different funding options. www.stateofwriting.com