Who Pays?: The Cost Of College Post Divorce
When people make the decision to divorce, they’re usually thinking about what will happen to their house, their bank accounts, and how time with the kids will be divided up. They’re not typically worrying about who’s going to be paying for their kids to go to college, especially if said kids are years away from that point in their lives.
While paying for college is something that most parents consider at one point or another, this expense tends to fall to the back burner when you’re caught up in the immediate complexities of divorce. However, as your life post-divorce unfolds and your children reach college age, you may be confused about who is going to end up paying for what.
If you and your spouse are contemplating a divorce and you share children, implementing a plan for college expenses into your separation agreement can save you time and stress, simplifying this period of life for you, your co-parent, and your children.
If your divorce is already complete, your kids are starting to hit college age, and you’re wondering what to do now, there are still many things to put into place and keep in mind.
In this blog, we discuss several important elements of covering the cost of education for divorced parents. Let’s dive in!
Does Child Support Cover College Expenses?
In the state of North Carolina, court-ordered child support does not extend into college years. It ends when your child turns 18 or graduates high school, whichever comes later, and only up to the age of 20. Therefore, a parent cannot be forced to pay for their kid’s college.
Many people fail to realize that even if your children are well away from the years of going to college, it’s a topic that can be discussed and addressed even in the midst of the separation and divorce process. If you and your co-parent wish to pay for your children’s college, creating an arrangement to do so during divorce can save you the hassle of figuring it out years later.
What You Need To Know
There are six essential things that we at Triangle Smart Divorce believe you should understand about the financials before sending your kids to college.
1. 529 Accounts/Saving Plans
529 accounts/saving plans are tax-advantaged college savings accounts for your children. If you go to court when you get divorced, these accounts are considered marital property and are typically divided between the parties or offset with other assets. The court will not dictate how each party spends their share of the marital funds. Therefore, your spouse can use that money any way they choose, it does not necessarily have to go towards your children’s educational expenses–though there are potential taxes and penalties if the funds are used for something other than 529-approved expenses.
However, if you go through the mediation process as an alternative method to court or come to an agreement outside of the court, 529s don’t have to be treated as marital property. You and your co-parent can set the terms for how this money is used, specifically for your children’s education. There are a variety of options you can choose when you make the decision to stay out of the courtroom.
2. FAFSA (Free Application for Federal Student Aid)
FAFSA is a form that is completed to receive financial aid for college. Children of divorced parents have a significant advantage in receiving assistance as the only income that has to be reported on the form is of their custodial parent. The custodial parent is whoever the student lived with primarily over the last 12 months. If their time was split 50-50 between both parents, the custodial parent is considered to be the one who provided primary financial support. That means kids with divorced parents can sometimes qualify for aid they might not have received had their parents still been together. We encourage our clients to use all the tools at their disposal to cover the cost of higher education!
3. Tax Credits
If you pay college tuition, you’ll possibly be eligible to receive a tax credit. However, only one parent can claim a child as a dependent for tax credits. That means even if you and your ex-spouse have both put money towards your children’s college, only one of you can claim this tax credit. This is something that should be handled in a separation agreement rather than down the road to prevent potential disputes. If it was not handled in your separation agreement, make sure to talk it over with your co-parent before your children start college if at all possible. You do not want to be having this conversation on April 15th!
4. Student Loans
If you took out a Parent PLUS Loan (an unsubsidized loan made to parents of dependent undergraduate students) before you separated, this is viewed as marital debt. However, if the loan is in your child’s name, you nor your spouse are financially responsible for paying off the loan. If you and your co-parent wish to pay some or all of your child’s loans, you can set the terms for that in your separation agreement.
5. Setting Limitations To Your Payments
In a private agreement, each parent can put limitations or requirements around their payments for their kid’s college. Common conditions that we’ve helped parents establish include requiring the student to have a certain GPA, taking a set amount of credit hours, taking 4 years or less to finish their schooling, attending only public in-state schools, and more. Other conditions can be what parents’ payments will cover, if it’s just tuition, or includes room and board, books, sorority or fraternity fees, and even transportation. Almost any condition you think of can be addressed if you and your co-parent are in agreement, but only an experienced family law attorney can be sure the settlement document is clear about exactly what you and the other parent have agreed to pay.
We would like to note that in situations where co-parents have only agreed to split the cost of their kid’s education without setting conditions, quite a few issues have come up once children reach college age. That’s why we advocate for setting smart rules around what your children need to do to receive the benefit of free education – it also teaches them responsibility and accountability.
If you planned to pay for your children’s college pre-divorce, we encourage you to keep that plan intact even when your marriage doesn’t work out. Your children have gone through a lot of change during the divorce, and we always encourage parents to keep as much the same as possible post-divorce to give them some stability.
6. Life Insurance
If you and the other parent are set on paying for your children’s education expenses, there is an extra precaution we suggest looking into to protect your children’s future. You and your spouse, with the help of experienced attorneys, can negotiate for life insurance to assist in covering education expenses in the unfortunate event a parent dies before the college obligation is fulfilled. While a court can’t order this, you and your ex-spouse can put it in an agreement.
How Triangle Smart Divorce Can Help You
If you’re considering your options for divorce, or your mind is already made up, the divorce attorneys at Triangle Smart Divorce are here to guide you through each step of the process. In addition to assisting you with asset and property division, custody arrangements, and other similar aspects, we can help you and your spouse establish a plan for your children’s college education. We think through the questions you don’t even know to ask. We keep the focus on your children’s well-being because we know they are the most important people in your life.
Our family law attorneys do what they can to help lessen the impact of your divorce on your children’s lives presently and in the future. Trust Triangle Smart Divorce to support you in establishing a thoughtful plan for your children’s education while also taking care of the other intricate details related to your divorce.
Call Triangle Smart Divorce today to request a consultation and discover your next step towards a brighter future for yourself and your family.