College Expenses and Your Divorce
College is expensive. That is a simple fact, and usually a major challenge for most parents and young adults. Many twenty-somethings are saddled with hundreds of thousands of dollars of student loan debt with no plan on how to pay it off. But children of divorced (or never married) parents have another hurdle to conquer: many divorced parents cannot agree on who should pay for college or how the costs should be divided.
Often times, children are very young when their parents separate, and it is not possible to know what the child and the parent’s financial situation will be five, ten or fifteen years in the future. In these cases, most courts, or settlement agreements will “reserve” contribution to the child’s college expenses meaning it will be decided when the child is about to go to college. Sometimes parents are able to reach an agreement when the issue of actual college expenses arises, but often times additional litigation is required at the later date. When determining who is going to pay for college, there are several things the court and the parents need to consider:
1. What is covered?
Generally, tuition and fees, the actual costs of the child's housing expenses, whether on-campus or off-campus, the actual costs of the child's medical expenses, including medical insurance, and dental expenses; the reasonable living expenses of the child during the academic year and periods of recess, and the cost of books and other supplies necessary to attend college. The court may require either or both parties to provide funds for the child so as to pay for the cost of up to 5 college applications, the cost of 2 standardized college entrance examinations, and the cost of one standardized college entrance examination preparatory course.
It is very important to note that under the newly enacted Illinois statute the costs of college are capped at the tuition and fees paid for in-state tuition at The University of Illinois at Champagne-Urbana in a double occupancy room with a standard meal plan, unless the court finds good cause otherwise.
2. How is it paid?
Payments can be made directly to the institutions or providers, to either parent, to the child or directed to a trust or a special account created for the purposes of financing a child’s post-secondary education.
3. Who pays for it?
The court can consider several factors in determining who pays for college or how to allocate each parent’s and the child’s respective responsibility including the standard of living the child would have enjoyed had the marriage not been dissolved and the child’s academic performance. A court will also consider the financial resources of a child, which includes any contributions to a College Savings Plan or 529 Plan that the parent(s) made prior to the dissolution of their marriage. A court may also order a child to complete a Free Application of Federal Student Aid (FAFSA) and other financial aid forms.
The most common point of contention revolves around the present and future financial resources of the parties to meet their needs. This provision is forward-looking and will only consider the current and future resources of the parties, not what the parents have earned, spent or done in the past. If one parent is remarried, the court has the ability to consider the income or financial resources of a subsequent spouse but only to the extent that the subsequent spouses’ income “frees up” the parents’ income or resources to contribute to college.
Sending a child to college is not only an important emotional decision, it is also a significant financial decision. As one of the most costly expenses of having a child, careful consideration should be given to who is paying for a child’s college education, especially in situations where divorced parents are not in agreement.