It is an exciting time when your child nears the end of their high school career, and prepares to go off for further schooling. However, this time can also be stressful and scary when you are working on getting a divorce at the same time. You have to think about how to afford the costs of sending your child off to college. Perhaps you had started a savings with your spouse before your child was even born, and now with the divorce, will that savings be split?
There are all sorts of questions that arise during this time, but it is possible to get through the divorce and pay for college expenses in a fair and equitable manner. It requires planning and cooperation by both parties in your Maryville divorce.
Option 1: Splitting the cost equally
If you are worried about how to pay for tuition, Kiplinger recommends agreeing on a monthly amount that both parents can afford to pay into the cost of tuition. This could be determined based on each parent’s income, or be a set amount ($350 per month per child, for instance). This money can be set aside by each parent in an account of their own choosing. You can dictate that this amount can increase over the years, or that it can remain at the same steady rate throughout the duration. The important part is about planning in advance and forethought, and making sure to write that down in your agreement when you split from your spouse.
Option 2: Paying in thirds
In this circumstance, each parent decides to help pay for the schooling of the child by agreeing to pay a third of the cost, with the child being responsible for the last third – which they usually pay through scholarships or student loans. If the child is too young to understand the agreement you and your spouse came to at the time of your divorce, they don’t need to know how it works until they are old enough to talk about the expenses required to go to college, and the manner in which families go about paying it.
Option 3: Planning for a public, in-state college
You may be familiar with this concept as many of us went to in-state public college. It’s the more affordable option. In this case, the parents would plan and save for the tuition of a public, in-state university, and when the time comes that the child is old enough to make a decision on where they wish to go, such as a less expensive choice as community college or a trade school, they then have the financial advantage from the two of their parents having planned ahead.
However, if your child wants to go to a more expensive school like a private college, it’ll fall to the family to decide how to handle that based on the savings you have. Perhaps the difference could be covered by student loans, or maybe one of the parents can afford to offer more money than the other. The point of this is that by the time the child is ready for college, there will be something there for them that is reasonable.
Option 4: College fund saving accounts
There are certain accounts out there that are meant to help you save money for your child’s college. The money in a 529 college savings account can be used for a host of educational expenses. Kiplinger also advises, “In addition to college tuition, it might cover K-12 tuition, apprenticeship costs and student loan repayments. If you have a 529 plan set up for your child already, you need to know that it can’t be jointly owned by both spouses. It must be set up in one spouse’s name only.”
Plainly put, “a 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs. 529 plans, legally known as ‘qualified tuition plans,’ are sponsored by states, state agencies, or educational institutions and are authorized by Section 529 of the Internal Revenue Code.”
However, if you are already divorced but haven’t already opened a 529 account, you can do so on your own. Usually, when parents agree on this after they have split up, both parents open up their own 529 accounts, and they agree on the amount they will each pay into it. When writing up the divorce agreement, there needs to be a type of accountability measure or mechanism written into it, just so that everyone can be kept honest and on track. Sometimes, the parents exchange statements each quarter to show that they have been making their contributions.
When the time comes, and your child decides not to go to college, or they get a full ride to a school (Hooray!), then it should be written in your pre-planned agreement how that money that the two of you have been saving up gets dispersed. In a 529 account, there are rules to follow, but outside one of those specialized accounts, you can make your own rules. Perhaps you want the money to rollover to the next child, or you want stipulations on how that money is used. As you can see, all scenarios should be played out and possibly planned for when you are setting up an agreement or account for your child’s education.
Finally, you should make sure that your divorce agreement has a recourse or punishment written in should one of the parents fail to make a payment or does not live up to their end of the agreement. It is possible that you may have to go to court and get an order to make them pay, just as you would if your spouse failed to pay child support payments.
Divorces are difficult. There are many aspects to have to worry about, assets and debts to be split, and the future of your child’s education to consider. Hopefully, we’ve made it a little easier for you to understand how to be able to take care of that tuition fund through careful and advanced planning when it comes to you and your ex-spouse. However, we know the divorce process is a tricky thing, and it is full of complex litigation and complicated laws. At Shepherd & Long, P.C., we want to help you get through your divorce as smoothly and as stress-free as possible. We offer experienced and trained Maryville family law attorneys to make sure you get the assets you deserve. With offices throughout Blount County and East Tennessee, we are readily available to you. If you wish to schedule a consultation with us, call us today at 865-982-8060 or use our contact form.