Money that previously went toward college savings is now divided between two households after a divorce. At the time of divorce, a custodial parent must be aware that the non-custodial parent is not always required to contribute to a child’s college education. When it is time to apply for financial aid, the income of the custodial parent will be taken into account on the Free Application for Federal Student Aid (FAFSA) application.
If there is an equal child custody arrangement, then it is likely that the income of the higher-earning parent will be taken into account on the application for financial aid. If the custodial parent remarries, then the income of the new spouse will also be taken into account on the FAFSA. Some colleges may also require information about the non-custodial parent as well. Therefore, if both parents remarry, then the salary of the parents and stepparents could be evaluated. Gifts from the non-custodial parent intended for college can be ignored for the purposes of filling out the FAFSA. However, colleges are within their rights to request any financial information about non-custodial parents.
In the divorce agreement, parents may want to specify separately which assets are available to which child. If some children have special needs or likely to gain scholarships, this may impact how much money is set aside for each child. This may be beneficial if colleges request to see the divorce agreement and could inform financial assistance provided by the college.
What is the 529 College Savings Plan?
Federal college savings programs, such as the tax-sheltered 529 plan, will also be taken into account. If there is a 529 college savings plan in place for a child at the time of the divorce, it may or may not be treated as a marital asset. When it is time to file a FAFSA, if the non-custodial parent has a 529 plan set up for the child, then it may be not be counted as an asset, whereas a 529 plan set up by the custodial asset will be taken into account as an asset. The ownership of a 529 plan can be changed as part of the divorce agreement. Saving for a college fund may or not be part of a child support agreement. A parent should contact a lawyer if they wish to make changes to child support.
Moorestown Child Support Lawyers at Stockton Family Law Assist with College Planning During the Divorce Process
A Moorestown child support lawyer at Stockton Family Law can provide guidance when planning for your child’s education after divorce. Contact us online or call us at 856-412-5052 for an initial consultation today. Located in Moorestown, New Jersey, we serve clients throughout South Jersey, including Mount Laurel, Burlington County, and Camden County.