Allocation of Higher Education Tuition Costs Between Divorced Parents

Financially supporting your child through college is an arduous process that takes years of financial planning to prepare effectively. As your child enters this new chapter of their life, it is vital that divorced parents properly allocate funds to support their child in all financial areas of higher education. That is why developing a financial plan that addresses the costs of higher education with your ex-partner at the time of divorce is imperative.

While some states have explicit statutes delineating how college will be paid for, Florida does not have this requirement. Florida does not address college tuition in a dissolution of marriage. One reason Florida does not have this requirement is that when a child reaches 18 years old, they are considered an adult and do not require child support as per state law. Addressing these expected expenses during a divorce is crucial to avoid conflicts later.

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Here are some actionable ways to address higher education payment strategies:

Marital Settlement Agreements

At the last stage of a divorce, the Marital Settlement Agreement is finalized. It addresses all the financial arrangements and agreements between the parties, including the agreed-upon or court-ordered child support and alimony. When developing this agreement, it is recommended to work with an attorney and determine the language and specifications about how the future college expenses will be distributed. Since college tuition is not a required aspect of Florida divorce, preemptively deciding how to allocate finances relieves the burden and stress of this obstacle down the line.

Establishing the parameters of dividing college expenses becomes more complex when delving into the specifics, such as how much college will cost, what your income and assets will be, what type of accommodations or club funding your child might need, and if your child will choose to go to college. Since these are all hypothetical costs, it is challenging to create final arrangements, so exploring different strategies around these costs is helpful.

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Strategies for Dividing Expenses

Undergoing mediation with a trusted lawyer can help both parties understand the resources and expectations of college costs. A popular option is discussing a 529 plan and having both parties regularly contribute to the fund. The benefit of a 529 plan is that the money is saved fairly and securely, and if your child decides not to pursue higher education or is granted a scholarship, the 529 funds do not disappear. Instead, you can use those funds for a different child, your own education, a future grandchild, or cash it out and pay the taxes you deferred.

One of the most common strategies is agreeing to a 50/50 split of expenses. When considering this option, it is crucial to assess if both parties have similar views on education, have the financial capability to split costs, and will be able to contribute to this long-term arrangement.

Another option is capping higher education expenses using a metric, such as the cost of in-state tuition in Florida. This ensures your child will be fully supported in attending an in-state school.

Allocating expenses proportionally to both parties’ income is another option; however, this is susceptible to change as incomes regularly fluctuate. Furthermore, if you or your former spouse re-marry, income may be impacted as well. While this is an option, it should only be considered if both parties are financially secure and able to contribute.

Be Proactive and Seek Professional Support

We’ve helped hundreds of families and understand the difficulty and emotional strain divorce causes. This is why I advocate for considering high education costs early on and considering mediation. It is through mediation that complex matters can be navigated fairly, calmly, and efficiently. During mediation, the attorney can guide both parties through the financial options and agreements and assess which option makes the most sense for their situation. Having this discussion during the divorce puts yourself and your child in the best possible position for the future.

It is also helpful to seek advice from a financial advisor who can evaluate the benefits and limitations of saving for your child’s college tuition, identify the best saving strategies available, and detail the various tax consequences each incurs. Moreover, a college placement advisor is another helpful individual to speak with because they can discuss financing approaches such as FAFSA, scholarship opportunities, and student loan options.

Understanding your options and proactively planning to prevent the possibility of future financial stress regarding higher education tuition costs is imperative. While divorce is a stressful time, these strategies can help you and your family better position yourselves for the future.

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