During these trying pandemic times, many divorcing couples find new challenges regarding educating their kids. In addition to having virtual K through 12 learning, and the challenges this creates for separated or divorced couples, college planning for these parents has its own obstacles.
How Do Divorced Parents Pay For College?
Consider the following as you proceed through the divorce process:
- Understand what your state laws are pertaining to paying for college. Not every state requires divorced parents to pay college expenses for kids. While Pennsylvania does not require parents to pay college costs, New Jersey takes a different position.
- Custody could influence financial aid packages. Will your student qualify for need based financial aid? The parent who has primary custody of the student is the one whose finances are considered for federal financial aid. Awarding 51% custody to the less affluent parent could result in better financial aid packages.
- Plan on paying for more than 4 years of college costs. Politico* reports that 56% of the time, it takes 5-6 years to receive a 4-year college degree.
- Property settlement could impact financial aid packages. If your property settlement agreement has a divorce clause, this could impact the student’s need-based financial aid package.
- Sage Credits. Are SAGE credits a good college planning asset? They could be if the student goes to a SAGE participating college.
Discuss Student Loan Payoffs
One of the big pitfalls is how to pay for student loans after graduation. Knowing beforehand what the monthly loan payment will be and for how long goes a long way towards avoiding surprises in the future. Having a conversation about who will be involved in paying for college well before applying makes sense to avoid disappointment due to how much college costs. Mapping out where college funding will come from, (ie: parents, student, other family members) along with how much debt each party is willing to accept, is key to overcoming this large financial event.
About David Emery, CFP®, CDFA®
David A. Emery is a Certified Financial Planner™ practitioner and has provided wealth management and financial planning services to clients in the Philadelphia area since earning his certification in 2003. Dave holds his Certified Divorce Financial Analyst (CDFA®) designation, in addition to his CFP™ certification.
Dave specializes in family issues of college planning and divorce planning. His experience helps families reduce the cost associated with educating their children and helps divorcing clients understand the equitable distribution of marital assets and the financial challenges which can result from divorce.