Couples going through a divorce are often concerned with their family's finances and their ability to support their children throughout the process. If you find yourself wondering how to pay your child's college expenses while going through a divorce, know that you are not alone. According to a study by TD Ameritrade, 40 percent of married couples get divorced, but over 66 percent of married couples have no financial plan in place to prepare them for divorce or death. Fortunately, experts have some helpful advice for parents dealing with this exact issue.
First, experts say that with the significant increase in college expenses over the past few years, planning is everything. Divorcing parents can make a plan that says that they will send their child to the best school they can afford, if the child wants to go there. However, experts say that parents need to be realistic about how the family's finances will be affected by the split. Child support and spousal support are typically more of a priority than higher education costs.
If your family has to scale back after the divorce, you may need to re-evaluate where your child will be going to college and whether the child will require financial assistance. You may also want to consider deferring your child's education for a year or two or sending multiple children to the same school if there is a discount offered.
Experts also advise that parents should save for their children's college by setting up a 529 plan. This plan allows you to save money without having to pay taxes on it when it's withdrawn, as long as the money goes towards education. In most cases, one parent will own the 529 plan, but you can change the account owner or beneficiary, or withdraw the money if necessary. If you have a 529 plan, make sure you and your ex-spouse have a plan to deal with the account moving forward and that the plan is mentioned in the divorce settlement.
It can be difficult for families to afford college, especially during a divorce. However, with the right planning, you and your ex-spouse can work together to make sure your children can pursue higher education.