One of the hardest things for divorced parents is handling the child situation. From child custody to child support payments, these types of situations can be difficult. And the thing that makes it the most difficult? Money. That’s why it makes sense that it takes a lot of planning and careful decision making when it comes to divorced parents and the college tuition dilemma.
Navigating College Finances and Divorce
Financial aid is a big part of sending kids to college these days. Most parents aren’t able to just foot the bill out-right, so most families are stuck dealing with the dramatic situation that is financing college tuition. The drama of this situation can be compounded by a divorce. Divorced parents are often divorced for a reason, and that reason is usually irreconcilable differences.
Irreconcilable differences means you and your spouse are not able to agree on basic, fundamental issues involving the marriage or your family, and you never will agree. While there is no set rule, the following are reasons for why a couple might decide to file:
- Conflict of personalities
- Emotional needs are not being met
- The marriage is suffering from financial difficulties
- Long physical separation
- Difference in interests
- Resentment
- Distrust
- Constant bickering
- Irreversible antagonistic feelings
Chances are, if you are seeking divorce, or are divorced, there are a few things that you and your spouse do not see eye-to-eye on. That “thing” could very well be finances.
Finding Common Ground for College
One thing that divorced parents might be able to reach common ground on is their shared child’s education. Even if you and your spouse both agree to continued education, you’ll want to know what you’re getting into when it comes to finding a way to pay for that continued education.
Here are some helpful hints from Tiffany and Clem Clay, a couple going through navigating those waters:
1. There might be different meanings when it comes to “custody” and “parent.”
By now you are probably familiar with the Free Application for Federal Student Aid, better known as the FAFSA. That application asks for the custodial parent. According to Clem, that’s a loaded question.
“‘Custody’ is not the legal meaning, not the tax meaning,” he explains. “If I am determined the custodial parent, my ex might get upset and say ‘What do you mean I am not custodial?!’ They should use a different word.”
When filling out the FAFSA, you should know that “custody” is determined by which parent the student has lived with the most during the past 365 days. For parents that have joint shared custody, there is a second test that you can take that establishes which household provided more of the financial support during the past year. According to Clem, “that guidance is very ambiguous,” says Clay.
Additionally, the form requests information for Parent 1, the custodial parent, and Parent 2.
“If I would have put my kid in front of that form they would have said, ‘Parent 2, that’s my dad, right?'” says Tiffany Clay. “No. Parent 2 is my husband!”
2. Provide enough financial information, but don’t overshare when it comes to listing all family members.
One common mistake is when families with multiple households list everyone’s financial information: mom, dad, stepdad, and stepmom.
According to Scott Weingold, managing director of the College Planning Network, that can be a costly mistake.
“You may be over-reporting your income,” Weingold says. Listing everyone, even if it’s not required, can change your situation and make you appear as if you have more money than you actually do. “A family that could have gotten aid from a school may be getting nothing now because it looks like they have more money available than they do.”
Weingold advises that parents focus on providing information for just the custodial parent, which will include a step-parent’s information if the custodial parent has remarried. While the federal government does not require information on the non-custodial parent to be included, the FAFSA does ask about child support received by the custodial parent. For many private schools, a non-custodial parent will be asked to provide his or her financial information as well. While this affects the amount that a private school might award, it does not affect the amount of federal aid a child might receive.
“This does get confusing and tense for families,” according to Dave Myatt, senior associate director of financial aid at Augustana College. “We get phone calls challenging why we need the stepparent’s information on the form in the first place. But we need the household’s information, including both individuals.”
This can be even trickier for couples that are not remarried, but live with a significant other. The non-parent is not legally a step-parent, but of course his or her financial contributions make up the household income. “If the parent is living with someone who is paying rent or utilities, that needs to be listed on the FAFSA as other untaxed income.”
3. Determine how involved a “non-custodial parent” should be.
This was a difficult things for Naomi Elliott to deal with, and one that most divorced but co-parenting parents go through – she wanted to avoid contact with her ex-husband as much as possible. She is the custodial parent. This became such a bone of contention that Naomi and her son Simon decided that Simon would only apply to schools that would allow the financial aid and financial aid application to be based exclusively on the custodial parent.
Of course this was not only a financial decision for Naomi, but due to her relationship with her ex-husband, it also became an emotional one. Naomi was unsure that Simon’s father would provide Simon with tuition money. Naomi did her research though, and found a number of schools that were not only a good match for Simon, but also schools that would not require information from the non-custodial parent to be included.
“I couldn’t afford a penny of his education,” says Naomi. She works as a real estate agent in Massachusetts. “The divorce wiped me out. I knew that I needed a financial package that was significant and didn’t ask me or my son to take out loans.”
Simon was accepted to Vanderbilt, where is a sophomore. “The school awarded my son $54,000 a year, which is a load of money,” says Naomi. The tuition covers everything but some living expenses. The difference is $10,000, and that is paid for by Simon’s father.
4. Prepare for the hard conversations.
When adding divorce into the mix, tuition costs can be harder to predict. As Clem Clay says, families may be overly optimistic about financial aid offers if they are not well informed. When it comes to timing, he suggests that parents have an idea of what they’re going to do and the complexities of the financial aid process by the summer or fall of the student’s senior year at the latest. Kids are often at the mercy of a parents’ willingness and ability to pay tuition. That can often be the main sticking point of the decision-making process.
“There is no requirement that the higher-earning spouse pays for college,” says Jeff Landers, a financial advisor. “That is a huge misconception many women have.”
When it comes to the divorce process, child support and funding for education is one of the main things that is discussed. It should be explicitly spelled out in the divorce agreement. “Otherwise you may find that one partner will suddenly say, ‘I’m not paying it,'” says Landers.