Divorce and College Funding

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Divorce can and often does have a disastrous effect on a family’s long-term plans, affecting savings, retirement, college educations for the children, and much, much more.

If you are divorcing, even considering divorce, be sure to include funding for college as a topic of discussion. Reach an agreement upon the contributions each of you will make toward the cost-of-attendance.

Be sure the divorce decree clearly spells out each of your intentions. Include a list of acceptable expenses. Consider the “what ifs,” such as a gap year and a decision not to attend college at all. And, be sure that each of you define the sources from which the funds will come.

Don’t end up, years down the road, approaching the other parent asking for support…

Divorce affects financial aid eligibility.

The FAFSA (Free Application for Federal Student Aid) requires information from the custodial parent, who may not be the same as the parent with legal custody.

The CSS (College Scholarship Service) Profile is used by a few hundred schools in conjunction with the FAFSA. It requires information from both parents.

Who owns the 529?

If owned by anyone other than the custodial parent or the child, the schools assess it differently. It can reduce financial aid eligibility by as much as 50%.

College administrators have the power.

They have many tricks to identify if a parent is lying. While you can’t game the system, there are a number of legal loopholes you can use – if and only if you start you’re planning on time.

Keep your focus on the kids.

Children of divorced or separated parents are less likely to attend college and even less likely to graduate. Those that attend and don’t graduate are often saddled with school debt that will affect them for decades.

For many parents, the rules governing financial aid can be a black hole of financial despair, often because they don’t take the time to learn about it or they don’t begin their planning campaign until junior or senior year in high school.

And, then, they are surprised when things don’t go their way.


Delaying Retirement Due to School Debt


School debt in retirement?

Yep, it’s trending that way.

It’s not your school debt, as you paid that off years ago. Rather, it’s the debt you incurred on behalf of your children.

You thought they would take over payments once they were gainfully employed.

Their employment, however, doesn’t pay what it should or what was expected.

Now, you’ve realized that you will be responsible for that debt.

That means you’ll be working well into your retirement years just to pay that off.

You’ve been sucked into a black hole of financial despair…

In 2016, an average parent owed about $32,000 on loans to help pay for their child’s education.

According to savingforcollege.com, that’s nearly $3,000 more than what the average student owed.

It’s getting worse…

Although students take out more loans, as the amount they can borrow is capped, parents take out more money. Parents have no cap.

If this is now or will become your reality, what’s your plan to handle that debt?

If you’d like to learn how to handle that debt, leveraging your savings and income so that your debts are satisfied and you can retire on or near the date you expect to retire, we are waiting to hear from you.