Sep 21, 2021
Divorce and the Child/College Student
As a fellow empty nester, I have spent the last few weeks reminiscing and thinking about how quickly my children grew up. I also thought about the other families going through this. Some have to go through this process as divorced parents. Depending on how the divorce was handled, moving a child into college can be a positive or, sadly, a negative experience. Mark Kantrowitz, a financial aid expert and publisher of SavingforCollege.com, stated some interesting facts. One is that children whose parents are divorced or separated are less likely to go to college and less likely to graduate. He noted that an increasing number of parents of college students are single, divorced, separated, widowed, or are unmarried but living together. (Reinicke, 2018)
Christina Lombardo-Zaun, Esq., an Attorney-Mediator at Alpha Center for Divorce Mediation, talks about putting in place expectations for what happens when and if children go to college when creating a marital settlement agreement.
I handle mostly divorce mediations and those couples are just amazing to observe. Yes, there is tension sometimes, but usually the parties both have the children’s best interests in mind, including paying for college. Lili Vasileff, author of “Money and Divorce: The Essential Roadmap to Mastering Financial Decisions”, stated basically there are two ways to address handling how post-secondary education will be paid: you can come to an agreement between parties or leave it up to the courts. (I say there is an easy way or a hard way respectively). If you are in this situation (or will be), there are some things you should keep in mind.
State law can and will dictate whether Courts have authority to order divorced parents to pay for a child’s college costs. The following states have laws or case law that gives courts the authority to order a non-custodial parent to pay for some or possibly all college expenses. They are: Alabama, Arizona, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Maryland, Massachusetts, Mississippi, Missouri, Montana, New Jersey, New York, North Dakota, Oregon, South Carolina, South Dakota, Utah, West Virginia, and Washington. (this is half of the states of the Union). (Frost, 2021) This is important to know if one parent moves out of state with the child. This could establish residency which could set the jurisdiction for the case.
Most courts will enforce a written agreement made by the parents. You should want to write an agreement that will be good enough to avoid having to take the other party to court to enforce. Some parents will be very detailed in their agreement spelling out who will pay tuition, room and board, books, fees etc. Some parents do not want to contractually obligate themselves and will put a more general clause in stating they will do their best given their financial situation. Others will land somewhere in the middle and will state that they will pay based on their percentage share of net incomes combined. If you have financial instruments set aside for college savings, such as a 529 plan, you should define who the custodian will be, and when and how that money is agreed to be spent.
As always, “life happens”. If you are drafting a marital settlement agreement, it is very important to put in the backup plans in case something does not go as planned. What happens if your child drops out of high school, or does not go to college, but rather a trade school? What if your child wants to take a year off before attending college? In addition to the back up plans, tax considerations must be taken into account. The parties need to decide who will take the child exemption and will this be every year or every other year (again, seeking input from a CPA would be beneficial here).
College planning starts well before age 17 or 18. Not every child will end up at college. However, parents should begin thinking about planning for college or trade school or whatever post-secondary education their child will pursue. Even if the divorce occurs when the children are young, parents should have this conversation and get on the same page with the same expectations for what happens when and if that child goes onto college.