The College Board reports that college costs have been rising at least 3 percent each year, but many families in Minnesota may still lack a financial plan in case of divorce or the death of one spouse. Divorce can make paying for college even harder, but there are steps parents can take to protect their children’s education.
Unfortunately, the more immediate expenses of spousal and child support often must take precedence over saving for college. Parents’ responsibility for a child’s college expenses in divorce differs from state to state, but in Minnesota, a parent cannot be compelled to pay for a child’s college education. However, this does not mean that as part of a divorce agreement, parents cannot address the issue of how much each will pay toward the child’s education. Divorce agreements often include a time limit of five years on how long parents will contribute toward college.
Many families may already have a 529 plan in place. The advantage of a 529 plan is that withdrawals are tax-free if the withdrawal is used toward education expenses. Usually, a parent owns the plan. However, the owner can change the beneficiary or the owner, so the intentions for the 529 plan should be addressed in the divorce agreement. Parents could also split the plan or could both be given the ability to monitor it.
Negotiating college expenses, child custody and property division can all be difficult. However, even couples who are experiencing significant conflict may be able to resolve their differences through the process of mediation. Where litigation is adversarial and may have a winning and losing side, mediation focuses on conflict resolution that considers both parties’ wants and needs and tries to reach a solution that suits everyone. Negotiation and mediation also give couples more control over the final agreement than they might have if they went to court.