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Planning for college expenses after a divorce

| Feb 12, 2019 | Family Law |

Alabama parents who get a divorce are generally not required to pay for their children’s college educations, but it may be a matter of concern to some parents anyway. Living in separate households can be costly, and parents may need to prioritize day-to-day living expenses and child and spousal support above college. However, there are still steps parents can take to plan for their child’s college education.

This might involve changing college plans. An expensive private college may no longer be a possibility after divorce. However, parents and their children should research what kind of loans, scholarships and grants are available.

Investing in a 529 savings plan may be the best option for many families. The advantage of this type of plan is that distributions are tax-free as long as they are put toward educational expenses. Some parents may already have a 529 plan at the time of the divorce. If they do, they may want to address the plan in the divorce agreement. Usually, a 529 plan is owned by one parent. The owner has the ability to change owners or beneficiaries, so parents may want to make sure that the divorce agreement specifies that the funds are for a child’s education. Another option is to make both parents owners of the account.

Parents may also want to consider including other provisions in their agreement to make sure they address any special concerns or situations. For example, they might want to make an agreement on who pays for expenses associated with a child’s favorite sport, music or dance lessons. If the child has spent every Christmas with one set of grandparents, one parent may want to ensure that will continue to be the case. Parents should be flexible, but spelling out certain expectations will make the time after the divorce less stressful for them and the children.