We love this guest article, written by Dr. Shokohi. It provides loads of important information for parents who are preparing for a divorce. College costs are always a difficult (and scary topic), but financial planning for college can become even more complicated once you are divorced. Who is going to pay when the big tuition bill arrives and how do you negotiate effectively with your spouse? Dr. Shokohi has the answers.
Even if your children are young at the time of your divorce, you still need to keep college in mind. Your children’s college tuition is likely to be one of the greatest future expenses you face, and even if you get full custody of your children, you should not have to shoulder that burden alone. Rather than waiting until the acceptance letters start coming to discuss who is going to cover what costs, you need to address this topic during your divorce negotiations.
Don’t Be Left High and Dry When It’s Time to Pay for College
According to the College Data, the full cost of an average state college for the 2017-2018 academic year was $25,290 a year. For private colleges, that cost shoots up to $50,900 a year. Keep in mind that many students these days take more than four years to graduate and that college costs have been rising precipitously each year.
These are big costs that you and your ex-spouse are going to have to find a way to cover!
Child support lasts only until your children reach the age of maturity, which is between 18 and 21, depending on your state of residence. If you don’t bring up college costs during your divorce settlement, you may have to take your spouse back to court to try and legally force them to contribute, which can be expensive, frustrating, and emotionally fraught for your family.
It is far better to negotiate college costs during your divorce settlement so that everything is taken care of when you and your spouse officially go your separate ways. Here are five important tips for these negotiations:
Get it all down in writing
It’s not enough for one spouse to verbally agree to contribute to a child’s college fund or to assume that you both will work it out when the time comes. What if your husband re-marries and has several additional children that he has to support? What if he loses his job or insists that he will only pay for community college? This is why you must include specific language in your divorce settlement that lays out everything in clear terms.
Identify who will pay for what
The divorce settlement should clearly indicate which parent will be responsible for which costs. For example, you may simply agree to split all costs 50/50, or perhaps your ex-husband will cover tuition, and you will cover room and board. Don’t forget to include the cost of books, travel, and possibly a small stipend.
Clarify the logistics
How will the money be paid? You may decide to open an escrow account and require each parent to contribute a certain amount per month. Another option is for one parent to provide a lump sum payment that can be invested during the child’s youth. Whatever you agree upon, get it down in writing.
Consider instituting payment and time caps
College isn’t getting any cheaper, and it may not be reasonable to expect one or both parents to cover the entire cost of college between them, especially if a child attends an expensive private school or takes five or six years to graduate. It may be advisable to institute payment caps, laying out the maximum amount each parent will pay per semester or year of school. Additionally, some parents also desire to implement a cap on the number of years they will provide funds per child so as not to indefinitely support a child’s long college experience.
Require life insurance and disability insurance
It won’t matter what your divorce settlement says if your ex-husband dies or loses his lucrative job before your children are ready to attend college. A smart move is to require both parents to invest in life insurance and disability insurance that will cover their college payment obligations. This way, if anything happens to your ex-spouse, your children’s college dreams won’t be destroyed.
As always, it is a good idea to work with an experienced divorce attorney when negotiating your divorce settlement. (Learn What to Bring to Your First Appointment with a Divorce Attorney.) Your divorce attorney can help you devise the correct wordage and advise you on what is reasonable to request from your spouse. It may take a little work to hammer out the agreement, but in the end, you’ll know that you’ve preserved your children’s access to a valuable higher education. Learn more about how to preserve your estate during divorce with our divorce article archive just for women. You can also get excellent information from professionals by attending a Second Saturday Divorce Workshop in your area.
Nadia Shokohi MD, PhD. CDFA is a former physician who made an unconventional career change to the financial services industry more than 10 years ago after her own divorce. With her own personal experiences and special expertise, Nadia’s mission is to provide women with the knowledge and tools they need to face the financial issues that come with big life transitions such as divorce, widowhood, and retirement. She also brings invaluable skills to provide doctors with the best advice and service available because she understands the unique challenges that only physicians face.