If you are the divorced parent of a college-age student, it is a good time to work with your ex-spouse when it comes to finances. Regardless of your history together, your child’s future comes first. These three tips will help you navigate some of the most important college investment choices you will face.
529 College Saving Plan
If both parents had joint control of the 529 college saving plan, it may lead to arguments over who should take sole control after a divorce. However, this may actually cost the custodial parent in the long run by insisting on controlling the plan.
Your 529 is considered an asset, which means it counts towards your income when it comes to financial aid programs such as FAFSA. By allowing the non-custodial parent full control of the 529, the custodial parent can reduce their declarable assets and better benefit from other types of financial aid.
Which parent gets custody is always a tricky subject. However, when it comes to college finances, things become further complicated. Typically the parent who earns the least can take the most advantage of federal or college aid programs. The problem is, not all programs are based solely on the custodial parent’s assets.
It is important to understand which assets you are obligated to declare when applying for each program. For instance, there are around a third of colleges require information on assets from both parents, and their new spouses, if applicable. With up to four incomes under consideration, you could face a scenario where you do not qualify for any financial aid for your child.
The unfortunate truth is not all divorced parents are able to reach amicable agreements on much of anything, let alone who controls a college-age student’s financial aid. Colleges that do require asset information from both parents may not take that fact into account, however.
You will need to sit down with your child and ex-spouse, if possible, and openly discuss all your options. If that means opting for colleges which are more accommodating of your circumstances, that is one avenue worth exploring to ensure you can help finance the education your child deserves.
If you would like a consultation with a divorce lawyer in Minneapolis, contact Lake Harriet Law for compassionate representation. We understand the challenges you are facing, and want to help you make the right choices for you and your family.