Who’s responsible for college funding post divorce?
Posted on behalf of Kathryn Wayne-Spindler & Associates in Child Support on Oct. 15, 2014.
Although child support payments typically end when children turn 18, divorcing couples often agree to college funding as part of their settlement. There are many considerations to discuss with your family law attorney regarding paying for college after divorce.
The first place to start is whether the supporting party will be paying for college and, if so, how much. “For some divorcing couples, the answer is uncomplicated. Money has been earmarked for college, Johnny’s interests come first, everybody can agree on who will pay what,” writes Jeffrey A. Landers in his article “One of a Divorcing Mom’s Top Headaches: Who Will Pay for College?”
In the case of designated college savings, both parties need to agree in the divorce settlement which parent will control the spending. A family law attorney will help them figure out if it’s better for one parent to manage the savings, or split it as part of the property division. Another factor to consider is whether the money will be split evenly between multiple children or discretionarily based on what school each child chooses. Further agreement needs to be put on paper regarding the rare, but possible, situation of surplus. The kids could receive tremendous scholarships or choose in-state public schools when there was Ivy League-funding set aside. Beyond that, parents should get in writing what happens to the money if one or more of the kids decides not to go on to college or drops out. An attorney can help word the settlement so that there is no financial enticement for a child to forgo college in order to receive the balance of his/her college trust.
If there are no earmarked college savings pre-divorce, the couple will need to decide how they will manage college funding. “You can 1) have the funds put into an escrow or trust account to make sure they are available when needed, or 2) get an up-front lump sum payment,” wrote Landers in a Forbes article, “Who Pays for College Tuition? Top Factors for Divorcing Women to Consider.” With a lump sum payment, the custodial parent is responsible for investing it wisely to ensure that it is available when the time comes.
The college funding portion of each divorce settlement will differ depending on the financial resources, number of children and their ages. For many Michigan families, the parents agree to base their funding on the cost of a four-year degree at the University of Michigan – Ann Arbor. This is similar to the popular “SUNY cap” in New York whereby the college funding formula takes into account the average amount required to fund a four-year, in-state Bachelor’s Degree from a State University of New York (SUNY) school. A commentary written by Richard A. Dollinger and Hillary E. Panek states, “parents often seek to define their own obligations for college education costs by invoking the SUNY cap in agreements or stipulations. The cap sets an upward limit on the total combined contribution of parents to each child’s college costs.” In both Michigan and New York, beyond the agreed-upon support, it is then up to the child and custodial parent to decide if it’s worth it to come up with any additional amount required for a private university education or out-of-state school.
There are 13 public four-year universities in Michigan. The current tuition costs for a four-year degree range from Saginaw Valley State’s $32,700 to University of Michigan’s $56,032 with the average being about $45,000. Additionally, a divorce settlement should address registration and lab fees, books, travel expenses, spending money and possible graduate school.
Room and Board is a whole other ballgame. The current average for a non-private dorm room, with a basic cafeteria plan is $8,900 per year for the 13 Michigan colleges but there are abundant options for Room and Board. For instance, Oakland University has a price menu for double occupancy, private rooms, student apartments and Greek cottages. Ferris State has graduated fees for Bronze through Platinum dining plans. At most colleges there are off-campus housing options that range from bare bones to luxurious. Divorcing couples should include in the divorce settlement a statement regarding if/how much the parents are willing to contribute to room and board during college studies.
If the expectation is that the student will apply for scholarships and financial aid, then agreement must be reached in the divorce settlement outlining how those responsibilities will be delineated.
As happens with teenagers, some decide not to pursue degrees after high school or they may start at one university and switch to another or change majors, take a sabbatical or study abroad. Some students finish their degrees early or take an extra year or two. If the children are young at the time of the divorce, it can be difficult for parents to anticipate these eventualities. However, divorce proceedings are the time to negotiate the college-funding piece of a settlement. Therefore, it is best to work with an experienced divorce attorney who can prepare a settlement that is satisfactory to all the family members no matter what circumstances change through the years.
Kathryn M. Wayne-Spindler advises divorcing couples to negotiate college funding in the divorce settlement and not count on changing it in the future. “Once it is in the judgment it is a binding contract and cannot be changed without the mutual agreement of both parties. It must be carefully considered because it is final unless language specifies it can be revisited and set aside.” Wayne-Spindler concluded, “It must be negotiated and agreed to because a court in Michigan can not order the payment of college expenses.”
MORE, “One of a Divorcing Mom’s Top Headaches: Who Will Pay for College?” Jeffrey A. Landers.
Forbes, “Who Pays for College Tuition? Top Factors for Divorcing Women to Consider,” Jeff Landers, January 24, 2012.
FindLaw, “Does Your Divorce Settlement Cover College Tuition?” Brett Snider, March 12, 2014.