Who Pays the Kids’ College Tuition After Divorce?
Sept. 7, 2021
According to data compiled by the Centers for Disease Control and Prevention (CDC), the divorce rate in Tennessee stood at 3.5 per 1,000 residents in 2019 (the latest statistical year available). This represents a sharp drop from 1990, when the rate was 6.5 per 1,000 residents.
When couples divorcing in Tennessee have children, some type of child support program is agreed upon, but what about college education once the children grow up? Who is going to pay for that? Is it required by law to be considered?
Some states do mandate that college expenses be factored into any divorce and child support agreement, but Tennessee does not, except in cases of affluent couples.
Nonetheless, the argument can be made that parents, even divorced parents, have an obligation to help their children be fully prepared for adult life. Thus, many divorcing couples do adopt a plan to take care of educational expenses after their children graduate from high school, a time when child support payments normally cease.
If you’re contemplating divorce or already in the process, in or around Memphis, Tennessee, or nearby in Germantown, Cordova, or Covington, and you wish to plan for your child’s college education, contact Shannon A. Jones, Attorney at Law.
Shannon A. Jones is an experienced family law and divorce attorney who can help you establish a voluntary college savings fund or other instrument for college financing.
Who Is Obligated to Pay for College?
Tennessee child support guidelines require parents to support their children only until they reach the age of 18 or graduate from high school, whichever occurs later.
Even though setting up a college trust fund is not mandated by state law, the Tennessee Supreme Court has ruled that affluent parents can be required to provide for their child’s financial future, which includes paying for college. The case in question is Helen Matlock Nash v. Charles Mulle.
Non-affluent parents may voluntarily feel the need to plan and care for their child’s future. They may agree to set up a college trust fund or other savings instrument to finance their child’s education after high school. This is best accomplished if the divorce is uncontested, that is, if it is mutually agreed upon by the divorcing couple outside of the courtroom and then presented to the judge for approval.
Financing Options to Consider
If a divorcing couple decides to help their child with college expenses, many factors must be considered, starting with costs. What is the tuition at a state university versus a private university? Will the fund cover just tuition, or will it also cover room and board, books, and other expenses? When the time comes, will the child be able to obtain financial aid through grants, scholarships, or educational loans?
Ultimately, the bottom line is how much a non-affluent couple can afford to sock away each month into a college fund. It may be that one parent (the one with custody) contributes by raising the child, and the other parent sets up a fund for future college expenses. Or, depending on finances, both may decide to contribute to the fund.
Another major consideration is how much trust you can place in your child to use the funds wisely. Should you make stipulations about how the money should be provided? For example, should the funds only be provided upon receiving receipts for books and other expenses, or disbursed in a lump sum?
You can always set up an educational trust for which you name a trustee to disperse the funds as needed so your child can’t draw from the account whenever he or she pleases. You can be the trustee and name a successor trustee should anything happen to you.
You can also fund a tax-advantaged 529 Plan as a savings vehicle for college expenses. In addition to the savings plan option, Section 529 of the federal tax code also allows you the option of prepaying the tuition for a college or university, which locks in that tuition rate for the time when your child is old enough to begin his or her education. This can require a fairly large lump sum payment, however.
Both the educational trust and the 529 Plan will essentially need to be done by each parent separately once they are no longer married or filing taxes jointly.
Experience You Can Trust: S.A. Jones Law
Planning for your child’s college education and setting up a fund to finance it require research, planning, and tough decision-making. You want to make sure that whatever you decide upon is more than just a handshake agreement.
You should have documents in place that spell out what each parent will contribute toward their child’s post-secondary education. It should be as clear as any child or spousal support agreement would be.
Shannon A. Jones is experienced in all aspects of the divorce process and can help both of you plan concretely for your child’s college education. If you’re located in Memphis and want to discuss college funding options for your child during any stage of the divorce process, immediately contact Shannon A. Jones, Attorney at Law. The first consultation is always free.