Divorce and paying for college

photo of graduate by Muhammad RizwanDivorce not only changes your reality, but that of your children. This is especially true when it comes to your children’s choice of college and the issue of paying for it.

For families that can afford or have saved enough money for their children’s college, this is a non-issue. The number of people who have done this, however, are few and far between. Most divorcing couples find themselves in a situation where paying for college takes some finesse and having some difficult conversations long before you would have had you remained married.

It needs to be pointed out that as a married couple, there’s no legal obligation to pay for your children’s college education–married parents could, and sometimes do, decide to pay nothing. In a divorce, however, it is standard practice to reach an agreement on some level of contribution to the children’s college expense.

One common agreement is to split the college expenses equally between parents. Another is to split the college expenses on a pro rata basis with the parties’ earned income.  A third favored approach is for each parent and child to contribute the same amount resulting in a third, a third and a third formula.  With the rising costs of a college education, however, these simple solutions may just be too expensive.  Recently, I have seen judges saying that neither parent can afford to contribute to college.

Of course, the goal of divorce mediation and collaborative divorce is to agree on an arrangement without giving all the power over to the courts. Your children may not even be in high school but the negotiation and discussion surrounding college payments can start with “where do we think he/she might want to go to school?” and “where can we afford to send them to school?”.

As example, let’s say a divorcing couple has two children, 13 and 11. Part of the discussion could be about whether or not the children are likely to have to grades to go to college, what kind of college could they get into, how to pay, etc. Let’s say the 13-year-old is a straight A student; while the 11-year-old is an average student. Part of the discussion could be do you want to treat the children differently or do you want to treat both equally?  Recently, I have seen clients agree to pay for a more expensive private college for the higher achieving student and directing the less academic child towards state schools or community colleges.

Part of the collaborative divorce process is working with a team of neutral experts. The finance experts will evaluate your finances and assets and set the table for a discussion of what you and your ex can afford to pay for college based on current data. Using our example, the financial expert can give you an idea of what it would take for each child or both to go to state college or private college. That factoring could include the amount of aid a child can get on his/her own (e.g. Stafford Loan) without a parent’s signature. So, you could factor a scenario of a 50-50 split or a three-way split between parents and the child.

Part of the unfairness of divorce for children is that many times these discussions are taking place at an age where your children are still developing, still figuring themselves out. The 11-year-old could be the next Albert Einstein. Yet an initial choice of college has been determined for him/her. Granted, many things could change between now and the time the child goes to school (e.g. one or both parents remarry; one or both parents could be earning more, etc.). The fact that parents agree on their respective percentage contributions will probably be less significant than whether the percentage applies to private college, state college or community college.  The collaborative divorce process tries to present a realistic scenario based on current conditions so that parents and children can prepare.

With the rising cost of a college education, many parents and children are wondering if going to college is worth the cost and the years of student loans. It’s not uncommon for parents to disagree on this topic and for one ex to be less than enthusiastic in paying for college. For the first time, the 2017 Massachusetts’ Child Support Guidelines set a maximum cap of how much a judge can order a parent to contribute to their child’s college education after a divorce. The cap is defined as 50 percent of the undergraduate, in-state resident costs at the University of Massachusetts-Amherst unless the judge specifically determines that a parent has the ability to pay a higher amount. It is likely that both parents will be thinking about this cap when negotiating the contributions to future college expenses.

Of course, there are many layers to the college discussion. One of the most important is managing the expectations of your child. He/she might have their sights set on that expensive private school. One or both parents need to have the frank discussion that money might not be available to them from either or both parents to do so. Your child needs to know that he or she will need to take out loans and apply for scholarships, work part-time during the school year and full-time during summer and during college to make their dream school happen.

Married or divorced, we want what’s best for our children. As a parent, many times you can deliver that. When it comes to college, particularly after a divorce, you might not be able to. Just as the team of financial experts lays out your future financial scenario, you must do something similar with your children. Maybe they will be okay with that. Maybe it will be the inspiration to do even better in school to push the envelope and see if their dream school is a possibility.

The reality of divorce affects everyone involved. By having all the cards on the table early on, you can manage expectations and work from there.