Parents of college-bound students know that paying for higher education takes planning and saving. For divorced parents, it can be particularly complex. Whether they’re paying for the college bills solo or contributing to the expenses in partnership with their ex-spouse, there are a lot of financial and emotional items to consider. If you fall into this category, here are five tips to help you work toward your college savings goal.
Tip #1: If possible, set aside time for a conversation with your ex-spouse.
If you and your ex-spouse desire to work on funding college for your child together, it may be helpful to have an open and honest conversation to align on a savings strategy. Ask your ex-spouse to pick a time to connect with you on this topic. While it may seem formal, scheduling a conversation will ideally allow both of you to set aside other emotions and get on the same page about funding your child’s college education.
When it’s time to talk, consider bringing in a financial advisor to help facilitate the discussion. A professional can help initiate the difficult topics, offer an informed opinion on how to reach a compromise and provide accountability as you divide and conquer the various expenses (see tip #2). Your divorce settlement may have stipulations or a framework to help guide the conversation.
Tip #2: Decide how to divide and conquer college expenses.
Decide sooner rather than later who will pay for expenses like tuition, books, a laptop, a parking pass, and room and board. If your child plays an instrument, participates in a sport or pursues another activity, there may be additional expenses (e.g. uniforms, travel, activity fees) for you to divvy up. If you’re able to come to an agreement, put your game plan in writing to help keep you and your ex-spouse accountable.
Tip #3: Fill out the FAFSA to see your options for potential financial aid.
Regardless of how much you have in college savings, it’s important to fill out the Free Application for Federal Student Aid (FAFSA) annually, starting when your child is a senior in high school. The FAFSA determines your child’s eligibility for financial aid (including needs-based aid, certain grants and loans) after taking into account the amount they expect your family to contribute.
In general, the FAFSA considers the finances of the parent the child has lived with more in the last year when assessing any qualification for aid (and that parent – often called the custodian parent – should complete the FAFSA). If the child has lived with both divorced parents equally, the FAFSA factors in the finances of whomever has provided more monetary support in the last year.
Different factors may be considered in the FAFSA calculation depending on your specific circumstances. Visit the FAFSA website for more details (https://studentaid.ed.gov/sa/fafsa/). You may also contact the financial aid office at your child’s college of choice for additional help.
Tip #4: Pay close attention to account ownership of 529s.
If you or your ex-spouse funded a college savings plan while you were still married, ownership of the account was likely decided in your divorce settlement. (Typically account ownership remains with the spouse who created and/or funds it most often.). If your ex-spouse retains control of one or more 529 accounts, consider if it makes sense – whether for financial or emotional purposes – to create your own account with your child as the beneficiary.
Tip #5: Set expectations with your child.
Your child is likely considering a multitude of factors to determine which college may be the best fit – including which one may be the most affordable. Be honest about the type of support he or she can expect from you and your ex-spouse. Bear in mind that this doesn’t mean you have to share all the nuances of your arrangement. Rather, consider providing key details to help your child make their choice – and know who to turn to when tuition or a school fee is due.
It’s true that divorce may add a few extra steps and considerations when saving for your child’s college tuition. But don’t let the complexity stop you. As a financial advisor, I have helped many clients sort out the details and feel good about their plan and savings. If you are interested in learning what your options are for reaching this goal, talk to a financial advisor in your area.
###. Andrew R. Petty, CRPC®, APMA®, is a Private Wealth Advisor with Marlowe, Petty & Associates, a private wealth advisory practice of Ameriprise Financial Services, Inc . He offers fee-based financial planning and asset management strategies and has been in practice for 16 years. To contact him, please call 407-249-4006, visit his website at www.marlowepetty.com or stopover at his office at 10917 Dylan Loren Circle, Suite A, Orlando, FL 32825.
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