Divorce brings about many challenges, one of which is figuring out how to finance your child’s college education. College tuition is a significant expense — approaching $40,000 per year, on average — and the financial dynamics between divorced parents can add complexity to an already difficult decision-making process.
Understanding your options, obligations, and available resources is crucial for ensuring your child’s educational future is secure. Here, we’ll explore how divorced parents can approach paying for college tuition, including understanding legal obligations, navigating financial aid, and collaborating together to achieve the best outcome for their child.
Understanding Legal Obligations for College Payment
It’s important to understand your legal obligations when it comes to paying for college, particularly in connection with child support and divorce decrees. It’s also important to note that the FAFSA® guidelines for divorced parents have changed. Rather than using the financial information of who the child lived with the most, the FAFSA will use the information from the parent who provided the most financial support. Let’s take a look.
Child Support and College Expenses
Divorce settlement agreements often address who will pay for college, which is separate from child support.
What exactly is child support? When parents get divorced, it’s common for the parent who does not have custody to pay child support, which usually translates to financial support for minor children. Parents can stop making child support payments when a child turns 18 and the child graduates from high school (unless the child is still in high school and cannot support themselves).
In some cases, one parent may also be required to pay for college, as well. Educational expenses typically get addressed during the divorce process, so you’ll know your exact responsibilities regarding your child’s college education. However, your obligation will depend on your state’s laws.
Some states may order divorced parents to help pay for college-related expenses, while others view them as conditional expenses. The following states allow courts to order non-custodial parents to help pay for college:
• Alabama
• Arizona
• Colorado
• Connecticut
• Florida
• Georgia
• Hawaii
• Illinois
• Indiana
• Iowa
• Maryland
• Massachusetts
• Mississippi
• Missouri
• Montana
• New Jersey
• New York
• North Dakota
• Oregon
• South Carolina
• South Dakota
• Utah
• West Virginia
• Washington
• Washington, D.C.
Divorce Decrees and Education Provisions
A divorce decree refers to the legal paperwork that formalizes the end of a marriage and outlines the binding terms after a divorce. It outlines child support and other factors, including education provisions. A divorce decree should also identify who will pay for college preparation and college itself, which can include:
• Standardized tests
• Admission applications
• College visits
• Tuition
• Room and board
• Required college fees
For example, one parent may be required to pay for room and board, while the other parent may pay tuition. You may also want to consider an appropriate cap on these expenses, considering the rising costs of college and the length of time it can take students to complete their degrees.
Keep in mind, too, that parents are not required to pay for their child’s college education. College students can rely on cash savings, scholarships, and both federal and private student loans to cover the cost of college.
Recommended: Examining the Different Types of Student Loans
Strategies for Tuition Cost-Sharing Between Parents
Let’s take a look at some strategies for how to pay for college for divorced parents, from negotiating contributions to making proportional payments based on income.
Negotiating Contributions
It’s important to review your financial situation together, consider the resources each parent can draw from, and figure out which types of expenses to cover. It’s best to create a written plan using an attorney or mediator to outline how you’ll manage college costs. The financial situation of each party should dictate a customized plan.
It’s important to note that when splitting costs, you may not be able to divide costs right down the middle (though splitting it 50/50 might make sense if both parents have a similar income and educational values). For example, your ex may not agree on the necessity of studying abroad or expensive curtains for a dorm room. Since those expenses aren’t “necessary,” either the parent who wants to pay for them can, or the student can be responsible for paying for non-essential expenses on their own.
Proportional Payments Based on Income
Those undergoing divorce often agree to split college expenses based on income. If one partner has a significantly smaller income than the other, the income disparity may be taken into account. For example, if one parent makes 80% of the combined income, that parent would be responsible for 80% of college costs and expenses.
Maximizing Financial Aid Eligibility
To qualify for financial aid, students must fill out the Free Application for Federal Student Aid, or FAFSA. For divorced or separated parents, the FAFSA process may differ from that of married parents.
Reporting Divorced Parent Information
The FAFSA is a free application that students can use to apply for federal, state, and institutional aid. Every family should file the FAFSA, and how you fill it out depends on whether you and your ex live together or not.
You answer questions on the FAFSA about the parent who provided more financial support that year. If that parent has remarried, the stepparent’s financial information will also be required.
The parent’s income and assets are used to calculate the Student Aid Index (formerly the Expected Family Contribution), which determines the student’s eligibility for federal financial aid. The parent who provided the least financial support is not required to put their financial information on the FAFSA, but it may be needed for other financial aid applications, such as the CSS Profile, which some private colleges require.
If you’re divorced and live together, you’ll add “unmarried and both legal parents living together” and answer questions about both of them on the FAFSA. Note that if you are separated from your spouse but still live together, you’ll indicate your marital status as “married or remarried,” not “divorced or separated.”
Special Circumstances Considerations
If you get divorced during the middle of a school year, you may want to submit a special circumstances form through the financial aid office of the school your child attends. The financial aid office may take a divorce into consideration and readjust your child’s aid award due to your financial situation. Anytime you experience a change in income or assets, notify the admissions office immediately.
Loans and Financing Options for Divorced Parents
Even with financial aid, scholarships, and savings, many families find they still need additional funds to cover college costs. Several financing options are available to help bridge the gap, including:
• Federal Parent PLUS Loans: Parent PLUS Loans are available to parents of dependent undergraduate students. They offer a fixed interest rate and flexible repayment options. However, they require a credit check, and parents are responsible for repayment.
• Private Student Loans: These loans are offered by private lenders and can be used to pay for college costs not covered by financial aid. Interest rates and terms vary, and a cosigner may be required.
• Home Equity Loans or Lines of Credit: If you own a home, you may be able to tap into your home’s equity to help pay for college. These loans often have lower interest rates than other types of loans, but they put your home at risk if you can’t repay.
• Payment Plans: Many colleges offer payment plans that allow you to spread tuition payments over the course of the year. This can make payments more manageable without accruing interest.
Tax Implications and Benefits
Fortunately, there are tax benefits to paying for college, beginning with claiming your student as a dependent.
Claiming the Student as a Dependent
Claiming a student as a dependent can save you thousands on your taxes. You can claim a college student as a dependent on your tax return as long as the student is younger than you, under age 24, and a full-time student for at least five months of the year.
Education Tax Credits and Deductions
Worried you can’t afford a child’s college bills? Don’t forget that tax credits and other tax benefits can offset the qualified costs of college or career school (tuition, fees, books, supplies, equipment). These benefits include:
• American Opportunity Credit: The American Opportunity Credit allows you to claim up to $2,500 per student per year for the first four years of school your child is in school.
• Lifetime Learning Credit: The Lifetime Learning Credit allows you to claim up to $2,000 per student per year for tuition and fees, books, supplies, and equipment.
• QTP/529 Plan: If you contribute to a QTP/529 plan to prepay or save for education expenses, you can withdraw the money you put in, tax-free.
• IRA Withdrawals: If you take money from an individual retirement account (IRA), you owe federal income tax on the amount you withdraw, but not the withdrawal penalty.
Communicating and Collaborating with Your Ex
Effective communication with your ex-spouse is key to successfully navigating college financing. Even if your divorce was contentious, it’s important to set aside differences and focus on what’s best for your child. This includes discussing financial responsibilities, coordinating on financial aid applications, and agreeing on a plan for covering any remaining costs.
It’s also important to involve your child in discussions about financing their education. Be open about the costs, what you and your ex-spouse can contribute, and what they may need to cover through scholarships, work-study programs, or student loans. This helps set realistic expectations and encourages your child to take an active role in their financial future.
The Takeaway
Paying for college can be a daunting task for divorced parents, but with careful planning, communication, and collaboration, it’s possible to navigate the challenges successfully.
You should start by understanding the legal obligations and exploring all available financial aid options. Work together with your ex-spouse to create a plan that works for both of you, and involve your child in discussions about financing their education.
Options for paying for college as a divorced parent include splitting the cost with your ex based on each of your incomes, having your student apply for scholarships, and relying on both federal and private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
FAQ
How is the expected family contribution calculated for divorced parents?
The expected family contribution (EFC) has been revamped to become the Student Aid Index (SAI) through the FAFSA Simplification Act. The SAI evaluates the financial resources that a student may contribute toward educational expenses. Because of the FAFSA Simplification Act, the parent who provided the most financial support during the year is the income that will be used to determine the SAI.
What if one parent refuses to pay for college?
Parents — married or divorced — are not obligated to pay for college. Child support might terminate when the child reaches the age of majority (such as 18 or 21), and students enrolled in a postsecondary educational institution might have to access financial support through college. Check with a family law attorney licensed in your state to give you guidance about who may be obligated to pay for college.
Can stepparents be required to pay for college tuition?
Stepparents are usually not required to financially support stepchildren, but in a few instances, family court may require a stepparent to pay financial support for a stepchild. Various factors may come into play, including the length of the marriage, relationship between stepparent and stepchild, existing financial support, and more.
Photo credit: iStock/FG Trade
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