How Should Divorced Parents Split a Child's College Costs?
One of the fairest approaches to splitting college costs is to split the remaining costs according to ability to pay. Ability to pay might be measured in proportion to each parent’s adjusted gross income. For example, if one parent has an adjusted gross income of $100,000 and the other parent $50,000, a total of $150,000, then the first parent would pay for two-thirds of the remaining college costs (i.e., $100,000 / $150,000) and the other parent would pay one third (i.e., $50,000 / $150,000). This approach can be refined by substituting discretionary income for adjusted gross income. Discretionary income is calculated by subtracting 150% of the poverty line from adjusted gross income.
Neither you nor your husband is likely to be entirely satisfied with this answer, which is often a good sign of a reasonable compromise.
Other families will split the remaining costs evenly, with each parent paying half of the remaining costs. This approach assumes that each parent has an equal obligation to contribute to college costs, regardless of ability to pay. It isn’t necessarily fair, since it places a relatively greater financial burden on the parent who is least able to pay.
Unfortunately, all too often children get caught in the middle of disputes like this one, especially when each parent is trying to minimize his or her costs instead of concentrating on helping the student pay for and graduate from college. Students whose parents are divorced are much less likely to graduate. For example, based on the 2009 Beginning Postsecondary Students longitudinal study, 31.3% of children of divorced parents who first enrolled in college in 2003-04 graduated with a Bachelor’s degree by 2009, compared with 45.2% of children whose parents were still married. A 1998 study by Judith S. Wallerstein and Julia M. Lewis showed that children of divorced parents are less likely to matriculate in college and receive less financial support than children of intact marriages. According to the study, 29% of children with divorced parents get parental support for college expenses, compared with 88% of children from intact families.
Ask your daughter to keep your ex-husband informed about her college experiences and accomplishments, and perhaps even ask him for advice from time to time. This will help avoid problems later, since divorced parents who feel excluded are less willing to continue paying for their child’s college education. She’s his daughter too, and an occasional telephone call, email message or letter will make him feel better about writing a big check every semester.
Note that neither parent should have “access” to the financial aid funds. The loan proceeds and other financial aid should be paid directly to the college where they will be applied to tuition, fees and other institutional charges. Any excess funds will be refunded to your daughter, who will use them to pay for textbooks, supplies and other college costs. Student financial aid funding, including the proceeds of education loans, must be used only to pay for expenses relating to attending an institution of higher education. This is a matter of federal law, per section 484(a)(4)(A) of the Higher Education Act of 1965.
Finally, ask the college’s financial aid office for a professional judgment review (also known as a special circumstances review or financial aid appeal) concerning the child support that was reported on the FAFSA and anything else unusual or which has changed about your financial situation. Some colleges will make an adjustment to exclude child support from the FAFSA when the custodial parent will no longer be receiving child support because the non-custodial parent’s child support obligation has ended. After all, the child support that has ended is not reflective of the custodial parent’s ability to pay during the award year. (Note that child support received for younger children should still be counted, since it will continue to be received during the award year.)