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Anticipating college tuition bills is nerve-wracking for most parents — and can be even scarier if you're in the midst of a divorce.
Yet careful planning can help ensure you put your children in the best possible position to get a higher education following the dissolution of your marriage.
About 4 in 10 marriages end in divorce, according to a recent study by TD Ameritrade. Yet two-thirds of married couples don't have a financial plan in the even of divorce of a spouse's death.
That can have a real impact when it comes to planning for college costs, which have been going up at a rate of at least about 3 percent per year, according to the College Board.
Tuition, fees, and room and board cost an average $46,950 for the 2017-2018 school year for a private nonprofit four-year college, according to the College Board, and $20,770 for a public four-year in-state school.
By taking the proper steps in advance, you can help protect those college dreams.
"Trying to plan for it is the best thing, even if you're not getting divorced," said Aviva Pinto, a certified divorce financial analyst and director at Bronfman Rothschild. "If you are getting divorced, it's harder. There's less money to go around."
Splitting a household in two can have a big impact on plans for funding a college education.
Providing child support for minor children and spousal support come before spending on higher education, according to Nicole Sodoma, a family law attorney and managing principal at Sodoma Law.
"Most people are surprised to know that if there was a plan in place regarding how to pay for college, the plan to pay for college sometimes has to take a backseat to the family's expenses," Sodoma said.
While some states require parents to pay for college, others do not.
What the court requires parents to pay for often depends on their financial situation and background, according to Madeline Marzano-Lesnevich, national president of the American Academy of Matrimonial Lawyers.
"They basically say send the child to the best school they can get into if they can pay for it and if that's where the child wants to go," Marzano-Lesnevich said.
That means that a parent cannot have the court make it mandatory for the other parent to pay for their child to attend Harvard if the money is not there. Likewise, graduate school is usually off the table.
A lot of agreements Marzano-Lesnevich draws up often include a maximum of five years for college payments.
"Everyone wants to know, 'When is this going to end? When are my expenses going to end?'" she said.
You may have to scale back your children's education as you scale back the rest of your life, particularly as you go from one household to two.
"Those expenses are doubling what you used to have to pay while you're living together under one roof," Pinto said. "There's only one pot of money. It can only go so far."
Consequently, parents may want to re-evaluate whether their children will attend private or public colleges and if they want to pursue scholarships, grants and student loans.
Other alternatives, like deferment or discounts for multiple children, can also help defray the costs, Pinto said.
Saving for college through a 529 plan is often the most ideal for all parents saving for college.
That is because the money accumulates tax-free and you do not pay taxes on it when it is withdrawn, provided that money is used to pay for valid education expenses.
Ideally, parents will have already established 529 or other accounts devoted to putting money away for college before they enter divorce proceedings, according to Marzano-Lesnevich.
If those funds are already earmarked for education, it reduces the need for divorcing parents to find that money elsewhere, say from the sale of the marital home, she said.
A 529 plan is typically owned by one parent. But because it is possible to change a 529 account owner or beneficiary, or the funds can be withdrawn, it is important to outline specific plans for those savings in a divorce agreement, according to Melissa Joy, a certified financial planner and partner at Center for Financial Planning Inc.
"That's something you want to document in the settlement," Joy said.
Parents may want to consider splitting the 529 plans in two, depending on the level of trust in their relationship. Or they could make it possible for both parents to monitor the account.
While attorneys are great for legal advice, it pays to also include a money expert in your divorce proceedings to help you understand your financial picture.
Because college costs can outlast child and spousal support, it is often what ties parents together for the longest period of time, Joy said.
Looping a financial planner in on the conversation while you're working on your divorce agreement can help ensure you're prepared when the college tuition bills start rolling in.
"Sometimes the college conversation is an afterthought," Joy said. "The earlier you loop them in, the more you have control and knowledge."