College Planning – What Needs To Be Done During A Divorce
Most parents have no structured college savings plans set up for their children. Sadly, the numbers are even higher after a divorce. When people divorce, there are so many complex issues to discuss and agree to, college planning for the children typically takes a back seat to everything else. Things such as, “We’ll work it out when the time comes” or “We’ll set something up after the divorce, when things calm down” are common in my client meetings. As a divorce mediator, I cringe when I hear my clients utter these phrases. Even the most well intended parents don’t follow through with these statements. Chances are, if something isn’t structured and worked out in the divorce agreement, there’s a good chance nothing will get done. This in turn will lead to heated post-divorce college planning arguments, court dates and legal fees when it comes time to pay for college.
Whether your child is 6 months or 16 years old, plans need to be made now for their college education. Pushing these decisions to a later date is not in your children’s best interests, now, and especially later, when they have no money for college. As part of any divorce involving children, a family focused divorce mediator will ensure some sort of plan is put together on paper. They will help you implement a plan that works for both of you and benefits your children the most.
One major question divorcing parents have when discussing college planning as part of their divorce is, “Where is the money going to come from to fund a college savings plan?” This is an excellent question without easy answers. These parents need to stretch their money very far during and after a divorce, and since money doesn’t usually grow on trees, funding is an issue.
As a divorce mediator who works with families on a daily basis, I have a few suggestions as to how to “find” some of the money needed for your children’s college planning. They are no surefire remedies, but simply a step in the right direction:
Claiming of the children – chances are that when you were married, you filed joint tax returns. Once you are divorced, you will file individual tax returns. Your income, tax bracket and who claims the children in a given year can have a decent sized positive impact on each of your individual tax returns, making your combined individual tax returns greater than you married combined ones. I suggest speaking with an accountant who is experienced in divorce and divorce law. The extra money you receive as individuals can go right into a college savings plan.
Reviewing Auto, Homeowners and Life Insurance policies – speak to your current agent about what can be done to reduce your costs without lowering your coverage and to get quotes from other insurance companies. However, be careful not to reduce your coverage and possibly put your family in financial ruin just to save a few dollars per month.
Make monthly auto-deposits into your children’s college savings plans, bank accounts, investments, etc. No matter what the amount, anything is better than nothing and having it done automatically makes it easy.
Designate a portion of your tax return, work bonus, commission check, etc. toward your children’s college savings plans.
Instead of family members giving your children unnecessary gifts for their birthdays and holidays, ask them to deposit money into their college savings account.
FASFA – Who claims a child on their tax return, as they get closer to high school graduation, is very important when filling out the FASFA (Free Application for Federal Student Aid).
Though none of these suggestions will pay for 4 years of college, if followed, they are a sound way to start saving and chip away at the ever growing cost.
Brian James is an experienced Divorce and Family Mediator with offices throughout Chicagoland and Southeastern Wisconsin. He started his mediation practice, C.E.L. and Associates, INC. in late 2005.
Brian earned his B.S. in Sociology from Northern Illinois University in 1994 and completed training in Mediation and Conflict Resolution at Northwestern University.
The first 10 years of his professional career, Brian worked in the Criminal Justice System helping domestic violence and divorcing families resolve family conflicts. He assisted with the healing process that took place after these life-changing events had occurred. His approach to mediation is client driven. By aiding his clients with the resolution of their divorce issues outside of the courtroom, Mr. James helps create a win/win situation for all parties in a divorce.