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.


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