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Divorced? How to Approach College Expenses

Nov 14, 2019 3 min read

Key Takeaways

  • The devil may be in the divorce decree’s details.
  • Keep a common focus (on your child).
  • Study up on FAFSA filing.

 

 

You don’t need to see Marriage Story to know that co-parenting after a divorce can be challenging even in the most amicable of situations. Add preparing your child for college — and its associated costs — and you face a gray area you may not have expected.

Studies show Opens in new window that children whose parents are married through their college career paid 23% of their own expenses, while children of divorce paid 58% of their own cost. But with a bit of research and thoughtful planning, you can help make things easier on your kid. Here’s what you should know.

 

Review the paperwork

Some divorce decrees outline an agreement for college funding. This often includes details such as:

  • Specific colleges your child(ren) can attend (perhaps based on price or location).
  • Payment ceilings for tuition and other costs.
  • The portion each parent will be liable for covering (and specific expenses to be covered).

It’s good to review the agreement, and keep in mind that unless it’s specifically outlined in the settlement, neither parent is legally obligated to pay for college.

 

Check beneficiaries on college savings plans

If you have savings in a 529 plan, who is the account owner? Whether it’s you, your ex-spouse or even ex-in-laws, that person will control all facets of distributing college funds for your child’s benefit.

Unless you are the owner or trustee, you have no stake in the assets. Times like these bring to the forefront an urgency to revisit financial plans, so while you’re thinking about it, take the time to also double-check your workplace retirement and IRA beneficiaries.

 

Find a common ground

If you can, have a candid conversation with your ex to find common ground and devise a workable plan. When face-to-face — and with the focus squarely on your child’s welfare — you might come to an amicable agreement where both of you feel the division of college assets is fair.

This is particularly helpful if the child was young at the time of the divorce. With college costs and next steps now clearer, taking time to talk and plan will help avoid potential issues over, say, $5 discrepancies down the road.

 

Know what counts

Some 85% of full-time college students in the U.S. receive some form of financial aid, and there’s a good chance child will seek out a loan from the federal government in addition to scholarships from schools and other organizations. However, it’s important to know the impact that divorce has on their financial aid applications.

Considerations Opens in new window include:

  • Who the child lives with: The parent who signs the Free Application for Federal Financial Aid (FAFSA) Opens in new window should be the one the child lives with for most of the year. However…
  • It’s not the calendar year: Parents must determine where the child lived most of the year during the 12-month period that ends on the day the FAFSA is signed.
  • Remarriage matters: When a child’s parent remarries, the new spouse’s income and assets must be reported on the FAFSA.

 

What you can do next

Divorce is complicated, and splitting education expenses doesn’t make it any easier. But by arming yourself with the right information — and putting your child’s interests first — you can make life easier for everyone involved.

If you secure tomorrow, you can enjoy today.

Help make sure your loved ones are protected if something happens to you, with Prudential Life Insurance.

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