Tips for divorced or separated parents worried about paying for child's college education

One of the most significant events in a young person’s life is the decision to go to college. However, if you are a divorced or separated parent, you might be uncertain about what obligations may exist to cover the cost of your child’s college expenses. How will tuition costs be divided? Who will pay for living expenses? Whose name should any potential loans be in? What are the possible tax benefits or consequences of these actions?

While the decision of coordinating finances might sound like a headache, it is possible to navigate this difficult terrain while minimizing any potential conflict. Below are a few tips that can help you do just that and start you on your way towards helping your child realize their dream of attending college.

Know your state’s divorce laws

Divorce laws can differ greatly from state to state. In New York State, payment for a child’s college education is not mandatory. However, absent a voluntary agreement addressing the issue, a party’s obligation to contribute is within the discretion of the court, acting in accordance with the existing laws and regulations. This means that a court can review the facts and circumstances of a particular case and make a determination as to how much, if any, liability a party has to provide financial assistance to the attending child.

Think ahead

The best time to address the issue of paying for college is before it arises. Do not wait until your child starts sending out college applications to begin discussing the expenses with your ex. The future obligations of the parties can be delineated while negotiating a separation agreement. Separation agreements allow two parties to set their own terms of divorce. It allows parties to craft an arrangement acceptable to everyone instead of forcing both to follow a court order that doesn’t work for either.

The question of college expenses can, and often should, be addressed at the time the agreement is being negotiated and drafted. There are many creative ways that the parties can come up with to meet their ultimate goal of helping their mutual child reach their college dream. For instance, the party paying child support may be able to negotiate receiving a credit against that obligation for any amount paid toward tuition, room, board, etc.

How to best utilize FAFSA and take advantage of education tax credits

The Free Application for Federal Student Aid, or “FAFSA,” is the mechanism by which students, or potential students, apply for federal grants or loans to help offset the expense of attending college. It is an extensive application that attempts to gain an accurate picture of your financial situation to determine your ability to pay for college and the amount of aid you should qualify for.

In the case of divorced parents living apart from one another, FAFSA only requires the income and asset information of the custodial parent to be reported. For the purposes of this application, the custodial parent is the person who has ever spent more time with the child in the last 12 months. Note that this may not align with your state’s definition of legal or primary physical custody, and it should not be assumed that a person having such is in fact the custodial parent for purposes of FAFSA.

Who the custodial parent is or will be should be considered with this fact in mind. In a joint custody situation, this could benefit your child with a greater aid package. Another thing to keep in mind, however, is that in the event one party remarries, the new spouse’s income must be included in the house income calculation.

The FAFSA does not require any income or asset information from the non-custodial parent. However, the non-custodial parent is still free to contribute any amount they wish to the child’s college expenses.

There are also several tax credits and deductions that should be considered when making any decisions regarding the apportionment of college expenses for a child. On the federal level, there are programs such as the American Opportunity Tax Credit that allow tax credits for tuition, and similar tax laws exist at the state level in many states that allow a credit or deduction for college expenses. However, you should consult with a tax professional as to what opportunities are best for you and your child.

Get your college tuition questions answered today

If you have concerns about how your child’s college will be paid for following a divorce or separation, it may be wise to speak with an experienced education or family law attorney today. There are many nuances to consider when it comes to how divorced parents should divide up the expense of their children’s college, and knowing what options are available can ease the stress and financial concerns of parents in this situation.
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Paul J. Tortora Jr. is an associate attorney with Tully Rinckey PLLC,. He can be reached at info@tullylegal.com or at (888)-529-4543.