As part of a divorce settlement, some parents in New Jersey might be required to contribute toward their children’s college expenses. However, even when this is the case, a judge will take a number of factors into account, including a parent’s financial situation. This means that in most cases, the divorce agreement cannot compel a parent to pay for an expensive private college education.
A divorce can create significant barriers to saving for college, and parents may have to put such expenses as child and spousal support ahead of college savings. Maintaining two separate households can make saving for college challenging as well. If parents already have a 529 plan, this can help offset some college expenses. Funds in a 529 plan can be withdrawn tax-free if they are used toward education. However, because one parent usually owns this plan and can change the beneficiary or owner, the uses of this plan should probably also be addressed in the divorce agreement. Parents could also each be given the ability to monitor the plan, or they could split it.
The College Board reports that college costs continue to rise, and most families have not made a plan in case one parent dies or parents get divorced. A financial planner might also help parents navigate saving for college and other financial issues after a divorce.
For example, people might also want to make sure they understand the value of certain assets as they are negotiating property division. Custodial parents often want to keep the home to minimize disruption to their children, but they may be trading it for another asset that does not have the same expenses associated with it. Upkeep, insurance and other costs along with a mortgage may make it unaffordable on a single income. Similarly, taxes and other expenses should be considered when looking at the value of other assets.