How to pay for a child’s college education may be a worry for many parents in Kentucky, but those worries might grow if the parents divorce. An Ameritrade study found that although around 40 percent of marriages end in divorce, about two-thirds of couple lack a financial plan in case of divorce or the death of one of them.
Maintaining two households after divorce is more expensive than one, and people may find that college savings is given less priority than basic day-to-day expenses, such as food, housing and health insurance. There may be a need for compromise in college planning, such as a child going to a state school instead of an expensive private one. When parents make an agreement about paying for college expenses, it usually has a limit of five years. In general, one parent cannot compel another to pay for a particularly expensive school or for a child’s graduate education. Parents may also want to look into the availability of financial aid, loans, scholarships and grants.
A 529 plan is one way to save for college, and some parents may already have one. It allows tax-free savings, and withdrawals are not taxed if they are used for education. However, parents may want to specify in the divorce agreement what it should be used for. Otherwise, the parent who owns the plan can make withdrawals or change the beneficiary.
The end of a marriage can be a difficult time for both parents and children. If parents are able to negotiate issues ranging from how to pay for their children’s college educations to custody and visitation without a court battle, it is usually better for children than a divorce in which there is a great deal of conflict. Negotiating agreements may also set the stage for a healthier co-parenting relationship in the years after the divorce.