While most, if not all, parents plan for their children’s future, parents who divorce are required to plan at an accelerated rate. Planning week-by-week schedules for the children, visitation, and the like, becomes common-place in order to serve the needs of the children. You end up trying to figure out how Christmas, Thanksgiving, and birthday celebrations will work from now until eternity. You go back-and-forth about extracurricular activities of the children, how they will be paid for, and who is responsible for what on which day of the week. You debate potential relocation of a parent, figuring out whether a possible out-of-state employment opportunity is plausible or not; such decisions aren’t nearly as difficult or complex for married parents as they are for divorced parents.
While no one can foresee the future, divorced parents recognize the importance of planning for it. One of the common questions that comes up involves college, and the expenses associated with it. Even if your child is still in preschool, it is never too soon for a divorced parent to begin thinking about and planning for college.
Child Support and College Expenses
The North Carolina child support guidelines do not factor in the costs of college for a child. North Carolina law is clear that child support obligations end when a child turns 18, or graduates from high school, whichever is later, but not past age 20. While college attendance is commonplace nowadays, North Carolina law does not provide for support obligations beyond high school.
Simply put, you will not find a North Carolina court ordering a parent to pay support for a child during his or her college years. The judge does not have the power to do so. However, just because the guidelines do not provide for such expenses, does not mean the conversation ends there.
Expenses by Agreement
While North Carolina law does not provide for or address college tuition and expenses, parents can contract for such expenses. You, as a parent, can incorporate provisions into a separation agreement that specifically address the terms agreed upon for college expenses. However, the negotiation process over how such tuition, fees, and expenses will be paid is often a difficult one. The two most common issues parents deal with involve children and money. College expenses involve both of these, and can be a difficult topic for parents to agree on.
The fees associated with college can be a significant financial burden on parents. Additionally, parents may have different views about college for their children. One parent might think it appropriate for the child to take on the expenses of college, while the other thinks it is their duty as parents to shoulder the debt. The debates could continue, such as location of the college, the type of college, or even whose alma mater the child should attend. Nevertheless, if college expenses are something you decide to put in a separation agreement, you should address all possible situations during negotiations, including how you all plan to save for college.
It is important to note that it may not be in your best interest to include terms about your child’s college tuition and expenses in an agreement. Later, a discussion on the pros and cons of this concept will specify why.
Saving for College
Parents can include terms in a separation agreement that require each to contribute a certain amount or percentage of income toward saving for a child’s education. If you choose this option, include specific terms in the agreement. Using phrases such as “a parent will save diligently for the child’s college education,” or “the parent will contribute to a college savings plan,” can prove ineffective and ultimately unenforceable. The more specific the terms of the agreement, the better. For example, “Each parent will contribute 10% of their annual income to Bill’s NC 529 plan currently located at Bank X.” Along with being specific, you should be clear about the type of fund the savings will be invested in. For example, a 529 plan is a lower-risk option for savings than an ordinary run-of-the-mill investment. Language should be included in the agreement about who will serve as the custodian of the account, who will have access to the funds, and what will happen in the event of an unauthorized withdrawal. The more detail the better.
Who Pays for College?
In determining who exactly will pay for college, there are several ways to approach. One is splitting the bill down the middle between the parents. However, if there is a gap in income between the parents, this may not be feasible. Additionally, this would not be the proper option for parents who do not earn enough to pay out-of-pocket for a costly item such as college. In other cases, it may be proper for each parent to pay a share of the college expenses. For example, mom agrees to pay 30 percent of the bill, while dad agrees to pay the remaining 70 percent. For situations where there is more than one child, assigning a parent to each child for paying college expenses may be a viable solution.
How Much Do You Pay?
You should consider the range of college tuitions, fees and expenses before obligating yourself to pay. The tuition and fees at Harvard will greatly differ from tuition at East Carolina University. Likewise, tuition at an out-of-state institution will be greater than tuition at an in-state public institution. The agreement should include parameters about the cost of tuition.
What are college expenses?
College expenses include a variety of fees, one of which is tuition. Tuition is only the beginning for expenses related to college. After paying tuition, other expenses like room and board, meal plans, books, incidentals, and regular spending money must be taken into account. As has been stated, the more detailed the better. Language such as “reasonable expenses” should be avoided unless there is a clear definition of the terms.
So, should you create an agreement related to college expenses? There is no correct answer to this question. It all depends on the person, and the situation.
There are pros and cons to including your child’s college expenses as part of your separation agreement. Some of the pros include: (1) you know and agree on college expectations; (2) you know your obligation and can save and plan accordingly; (3) such an agreement on college expenses resulted in your former spouse agreeing to terms he or she probably would not have agreed to otherwise; and (4) there is a clear plan in place for your child’s first tuition bill. Along with the pros, however, come the cons. The cons include changing of your financial situation. While your financial situation may be stable and comfortable today, 10 years after the fact, there could be additional factors and moving parts added to the mix. More children added to the family, a serious or debilitating illness plaguing your life, or your financial situation worsening, are all plausible factors that could affect your obligation – one that you now cannot afford. Simply put, there is no way for you to anticipate any changes in your financial future, which can have a negative impact on such an obligation to pay for college.
Just the same, you cannot predict your ex-spouse’s future financial situation either. Perhaps your spouse was once the sole provider, but years later, you are more financially fit than he to handle the college expenses of the child. Are you prepared and willing to obligate yourself to such a responsibility without assistance?
Another factor to take into account is the relationship with your child. You cannot predict the relationship you will have with your child. There could be a situation where your child ceases communication with you. In such a situation, would you still be willing to support an obligation to pay his or her college expenses?
Lastly, even if there is no formal agreement in place to pay your child’s expenses, you could always foot the bill anyway. Just because you do not agree in writing to pay for such expenses, does not mean that you cannot do so when the time comes. The takeaway is clear. In North Carolina, the support guidelines do not obligate a parent to pay for a child’s college tuition and expenses or support beyond high school. However, divorcing parents are free to contract and agree to such support. Weighing the pros and cons in your situation is key, and if you decide to take on such a responsibility, make sure the terms are clear and there are parameters in place.