Who Pays for College Tuition in a Divorce?
Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC, a firm which exclusively advises affluent women throughout the United States before, during and after divorce. He assists women and their divorce attorneys with deciding on the most advantageous way to divide marital assets and enable them to negotiate more favorable settlements, especially when there are complicated financial and tax issues. He also writes for Forbes.com and the Huffington Post.
By now, high school seniors have responded to college acceptance letters that were sent out in recent weeks, leaving their parents with the eternal question:
“How am I going to pay those tuition bills?”
For parents going through divorce, the questions are even more complicated and emotionally charged. After all, for divorcing parents, it’s not just a matter of “how,” but also “who” is going to pay for college tuition.
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In general terms, child support payments stop when children reach the “age of emancipation,” which in most states is between age 18 and 21. Beyond that, do divorced parents have any obligation to pay for their children’s college education?
If you are contemplating divorce and have children who are or will be attending college, here are a few important points you need to keep in mind:
- Unless ordered by the courts, there is no legal obligation to pay college tuition.
In the absence of a court order, the only way to secure funds for college tuition is to include the obligation in your divorce settlement agreement you can (1) have the funds put into an escrow or trust account to make sure they are available when needed, or (2) get an up-front lump sum payment (as described below).
- If the terms have not been negotiated in a divorce settlement agreement, the courts can order a parent to pay for their child’s education – but that depends on the state in which the divorce occurs.
Most states allow courts to order the non-custodial parent to help pay for college. But a few, like Alaska, Nebraska and New Hampshire, do not, except in those cases where the parents had a previous agreement.
Typically, though, even in the states that don’t require paying for college expenses, the courts recognize the need for children to have a college education. Therefore, they can allow resolution of the issue to be part of the divorce settlement agreement, in addition to the amount and term of alimony and child support to be paid.
- Divorce settlement agreements should specifically include a written college support agreement in addition to any other child support agreements.
A college support agreement typically includes details such as what percentage of college expenses each parent is responsible for, limits on payments, restrictions on which college the child should attend, exactly what expenses will be covered, etc.
Each one of these details usually involves negotiation. Remember: The cost of college may include tuition, room and board, books, extracurricular activities and a monthly allowance.
Likewise, limits to payments can be problematic and may involve intricate calculations and stipulations. In New York, for instance, many divorcing parents agree to limit their contribution to what is commonly referred to as the “SUNY Cap.” This cap limits a parent’s obligation to a percentage of the cost of a State University of New York (SUNY) school. In other words, regardless of where the child attends college, if the SUNY Cap is applied, the parent is obligated to pay only the amount specified in the cap. (Parents in other states may agree to limits based on tuition at state schools in their area.)
However, even something as seemingly straightforward as a tuition obligation cap can make for intense negotiation. As Daniel Clement points out in his article Divorce and the Costs of College: Applying a SUNY Cap, courts can have broad jurisdiction here, and they have sometimes concluded that there is no basis to impose the SUNY cap.
- Things get even more complicated in situations where custody of the children is split, and Mom has custody of one child (or some children), and Dad has custody of another (or others).
Courts generally want to see that the numbers balance and that one parent is not unfairly burdened with college costs. Factors such as how much each parent earns, the tuition expenses and other child care costs are factored into the equation.
- An up-front lump sum payment may be preferable to recurring payments.
Particularly if your child(ren) are young, it may be preferable to negotiate a lump sum payment up-front, assuming there are sufficient assets available. When your child(ren) reach college age, you’ll have these funds in-hand to help pay the tuition bills –provided you have put those aside and invested them wisely.
Ascertaining the future costs of college can be very difficult, especially if your children are still young. A consultation with a divorce financial planner can help you better understand all the options available and help you plan for a stable financial future for you and your children.