Factoring in College Costs During a Divorce Settlement

The list of topics/expenses that must be addressed in a divorce can be extensive. Some expenses that may seem far away often needs to be tackled sooner than expected. Covering college costs or other post-high school education for any children involved may be one of them.

If you litigate, the judge will likely order one or both parents to contribute to higher education costs, such as college tuition, fees, books, room and board, laptop (if required), and possibly transportation to and from school. If you use Mediation or Collaborative Practice (CP) instead, you will have greater flexibility when negotiating which expenses are covered and by whom.

Consider the Ability to Pay

College is much more expensive today than it was when the parents of most college-age children attended. If you have not stayed on top of current tuition and room and board costs, you are in for major sticker shock. Public or state colleges can offer somewhat lower costs (particularly for local residents), but private schools can easily soar in the range of $40,000 per year. Long ago, college students could often make enough money during the summer to cover their educational costs for the upcoming year. That is not the case anymore. Even many parents are unable to absorb the astronomical college bills. While most parents truly want to help their children get a good education, many are confronted with reality.

The issue of whether parents realistically have the ability to pay for college costs is the first issue to be addressed by the Court or by the couple and those helping them negotiate a divorce settlement.

Be Aware of How College Costs Interact with Child Support

Some parents assume (or at least hope) that once a child begins attending college, child support payments will decrease, or be eliminated, because they are now paying college tuition, room and board, etc. This is generally not the case, however, especially if there are other children still at home. There is a good chance that the student still spends summers and vacations at home, and may even come home on weekends. Fixed costs for housing usually remain the same, regardless of how many days per year the student lives at home. You would not expect your mortgage company to give you a discount when your child goes away to college, would you?

Understand the Complexity of the Law

When it comes to mandating parental support, the Court’s authority ends when the child turns age 23 – or before then, if the child begins working full-time or is considered otherwise “emancipated”. What happens, though, if after taking a gap year to travel or work, your child decides to become “unemancipated” and go back to school? Or what if s/he drops out of college due to an accident or medical situation, and later returns? In most cases, the parent obligation is revived once the child returns to college, provided the child is under age 23.

There are other gray areas that must be considered as well. What if your child takes five years to get through college instead of four, perhaps because of a change in majors or the need to work part-time? Are you obligated to pay for the final year? It depends. If you are under a Court order, you will likely have to pay as long as the student is under age 23 (though you are not obligated to pay for a Master’s degree). Through Mediation or CP, however, both parents could potentially agree to require a certain level of accountability from the child (such as keeping grades above a certain grade point average) to ensure that the student is taking education seriously.

Benefit from Negotiating through Mediation or Collaborative Practice

In the case of a traditional family situation, it is the prerogative of the parents to decide how much they will contribute to a child’s college education – if anything. Some parents may feel strongly that a child will work harder and appreciate an education more if s/he pays for a good deal of the cost. Others may believe that a child does not have an inherent right to go to college. Unfortunately, during a divorce, much of this parental discretion can be removed, especially if a judge steps in. Then it becomes a case of how much a parent will cover, not whether a parent will pay for a college education.

Fortunately, through Mediation or CP, a couple enjoys a greater degree of flexibility in terms of reaching an agreement. Sometimes parents may decide to pay 100% of their child’s college costs, either through savings, family gifts, or earnings such as bonuses or stock option profits. If they cannot pay for the entire cost, each parent may commit to paying a realistic portion (usually in proportion to their income). Perhaps each parent will agree to pay 1/3 of the cost, with the student being expected to pay the remaining 1/3. Parents may also decide to put an objective limit on what they will pay (for example, an amount equivalent to the cost of tuition at a state college such as UMass Amherst), and ask the student to pay the difference if s/he chooses a more expensive private school.

It can be difficult when each parent has a different perspective. A father, for example, may reason that if his own parents didn’t pay for his college, why should he pay for his child’s? The mother, on the other hand, may remember how her parents paid for all four years of her college education, and want to do the same for her child. Through Mediation or CP, third party professionals can help them work out their differences and often reach a mutually agreeable compromise.

The standard agreement language in the paperwork I use with my clients stipulates that initially the child must apply for as much financial aid as possible. Both parents must assist in this effort and provide any financial information requested. After the amount of aid has been determined, we then begin to work out the details of who will cover what. Student loans will require special consideration, as they will need to be paid back at some point.

Get a Dose of Reality

While good parents should put the needs of their children above their own, at some point there must be a limit as to how far you carry this mindset. To some extent, you do need to think about your own situation. For example, it is unwise to go into so much debt putting your child through college that you have to live on bread and water, or are unable to save for retirement. As the saying goes, there is financial aid available for college but not for retirement.

Ultimately, you are the one who best understands both your financial situation and your child’s potential.