Affording College After Divorce

By Harry Siegel
March 4, 2013
Posted in: SALUTE TO HOWARD COUNTY CHAMBER OF COMMERCE

Paying for college has become one of the most stressful aspects of parenting. It is becoming increasingly difficult for students to pay for a major university education, both in Maryland and throughout the country, due to the prohibitive costs. Even beginning with an associate's degree at a community college only delays the larger costs of a major university thereafter.

Posted in: Salute to Howard County Chamber of Commerce

 

Imagine now that you are not one household, but two, and aside from struggling to manage each household, two former spouses need to address the issue of paying for college for their children.

Add to it that, in Maryland, there is no legal responsibility for a parent to contribute to a child's college education. If getting divorced was not enough to stress you out emotionally and financially, overlaying how college will be paid for on top of divorce can send anyone over the edge.

But not to fear: Divorce strangely creates a wonderful opportunity to plan for paying for college.

FAFSA Assistance

Here's an example. A divorced couple's child was accepted at a $55,000-per-year prestigious college. The wife earned about $30,000 annually, while her husband earned nearly $300,000 per year. Their daughter lived with the wife and visited with her father.

The mother visited a Free Application for Federal Student Aid (FAFSA) specialist - yes, there is such a specialty, and yes, you need to know about them - and by the time the smoke cleared, the daughter went to her prestigious university for about $5,000 per year.

Everyone's experience will be different. This is merely an example of how divorcing or divorced spouses can provide an ultimate gift to their children - a college education.

So, what is FAFSA? It is the process by which the federal government, colleges and universities provide scholarships, grants, student loans and other aid to college students and their parents. Visit www.fafsa.ed.gov for more information.

Simply put, federal financial aid is distributed, in part, based on the income of the parents, certain assets of both the parent and the student, as well as the income earned by the student.

Things to Consider

When parents are separated from each other, regardless of whether they are divorced, have a written separation agreement or even have no agreement, the parent where the student spends the majority of overnights can fill out the FAFSA form without the other parent participating. There are exceptions, of course, as certain private and other schools do ask - or require - information from the other parent.

There are a few more layers of complications, including but not limited to the cost of the university, whether a parent has remarried and what happens with the stepparent's financial information, and required deadlines for filing, but you get the picture - this stuff is complicated, but if handled properly, it can reap amazing financial benefits for children of divorce.

No parent should fill this form out alone if he or she is serious about maximizing college financial aid for the student. Instead, invest the necessary time and money in an expert who knows how to 1) help you plan to fill out the FAFSA form in the future, 2) be of assistance during the divorce process to maximize planning for future aid and 3) actually fills out the form for each year of each child's college.

In the case of the student whose college costs exceed $200,000 but with proper planning only had to pay $20,000 over four years, the result speaks for itself.

Planning Is Crucial

Your divorce attorney must integrate into your divorce how to maximize FAFSA and college benefits for your children and provide you with the outside referrals to top FAFSA specialists to help you help your children. There are very few of these experts, but they are each worth their weight in gold.

It is extremely important to understand what can be accomplished in court and what cannot. Judges in Maryland have no jurisdiction to order parents to contribute to college for their children. Therefore, the only way to accomplish these goals is by an agreement between the parents. That often can be challenging, especially when both parties are feeling the emotional and financial struggles that accompany divorce.

While child custody, child support and alimony often can become contested issues upon divorce, when both spouses realize that they can creatively craft separation agreements and settlements to maximize financial aid for college, they understand how they can work collaboratively to save tens, or hundreds, of thousands of dollars for their children to attend college.

Harry Siegel, Esq., is a founding partner of The Law Office of Harry B. Siegel LLC, in Ellicott City. He can be reached at 410-792-2300 or e-mail hsiegel@siegellaw.net.