Divorce and College Education Costs for the Children

The scope, extent and amount of a parent’s obligation to contribute to a child’s post-high school college education are oftentimes a source of uncertainty and anxiety for families of divorce. The uncertainty and anxiety for many could be due to the soaring costs of college tuition, ACT and SAT tutoring, college preparation courses, the application process/costs, academic competition to gain acceptance and the fact that the value of a college degree is declining while the cost is soaring (tuition, fees, and room and board cost an average $46,950 for the 2017-2018 school year for a private nonprofit four-year college, according to the College Board, and $20,770 for a public four-year in-state school).

Careful planning coupled with proper legal counsel can help ensure you put your children in the best possible position to get a higher education following the dissolution of your marriage. In an effort to simplify and perhaps streamline these issues within a divorce proceeding, the Illinois legislature has changed the rules and has amended the statute (Section 513) effective January 1, 2016.
Here are some points to consider:

The Basics: Illinois law gives judges the power to allocate college expenses (even expenses incurred during school breaks) for children whose parents are divorced. The law defines “educational expenses” as including (but not being limited to) tuition and fees, housing (whether on- or off-campus), medical insurance and expenses, dental expenses, books and other supplies.

Applications and Preparatory Testing Fees: Under the new statute, the court can require parents to provide funds for:
1. Up to 5 college applications. Depending on the school, these application costs can range from $50-$100 each. Some schools accept something known as a “common application” which is paid for one time but can be submitted to any school which will accept it. Applications typically are submitted at the onset of a student’s senior year.
2. 2 college entrance exams (ACT/SAT). These tests typically cost $55-$60 each. The ACT test, which is the more common of the two exams, is offered in October, December, April and June of the student’s junior year.
3. 1 standardized college entrance examination preparatory course. There are many options and variations of courses available which range from online, classroom and private tutoring. These courses typically range in costs from $300 – $1,500(+) and offer varying degrees of private help depending on the student.
Living At Home While Going to School: If the student lives with a parent while attending school, the court is to consider the child’s living expenses and allocate between the parents and child “an amount that pays for the reasonable cost of the child’s food, utilities, and transportation.”

The Financial Caps: The law ties a parent’s maximum contribution to the cost of tuition, fees, room-and-board (double occupancy, standard meal plan in a residence hall) at the University of Illinois, Champaign / Urbana. For years, many trial courts have struggled with the unwritten “guideline” that the University of Illinois should represent the outer limit of a parent’s financial obligation under the statute. The new statute seemingly removes that decision from the process and ratifies that the University of Illinois, is in fact, the benchmark to be applied. Depending on the chosen course of study, the base annual tuition varies for Illinois residents, depending on the student’s chosen declared major. The school also provides a baseline estimate of additional expenses for housing, campus fees, books and supplies, and other miscellaneous expenses on their site. This does not appear to include, car expenses, medical insurance, uninsured medical and dental expenses, and other typical living expenses that many students also have. The present and future financial resources of both parties to meet their needs, including but not limited to, savings for retirement.

FAFSA Applications: The new statute specifically provides that the Court “may” require both parties and the child to complete the Free Application for Federal Student Aid and other financial aid applications.

Accounts Established for College: This new provision contains very few words but has a significant meaning in the context of determining the source(s) of payment for college education. It mandates that the Court is to consider (not may consider) the following types of accounts as a resource of the child in determining how college expenses are to be paid for:
a. An account established prior to the dissolution that is to be used for the child’s post-secondary education;
b. An account in a state tuition program under Section 529 of the Internal Revenue Code; or
c. An account that is some other college savings plan.
While custodial accounts, UGMA accounts, UTMA accounts and 529 Plan accounts would clearly fall into this category, it is unclear whether a Trust maintained for the child, would also be accessible to the Court in allocating the expenses between the parties.

Restrictions: The child must maintain at least a “C” grade average. Payments are to end, no matter what, upon a child’s 23rd birthday (or 25th for good cause, like, a delayed start due to military service). Unlike child support, the parents’ contribution to college expenses is not dictated by a formula or guideline spelled out in the law, as it is left to the discretion of the judge.

Coordinating and Timing of Payments: This potentially may have the biggest impact for parties who may be estranged after the divorce, or for children who may be estranged from one or both parents. It provides that the Court may order that payments be made to the child, to either party or to the educational institution through a special account or trust created for that purpose. Coordinating the timing and amounts to be paid for ongoing expenses can be difficult in even the best of circumstances, particularly when each parent and the child may be contributing separate amounts. Almost all of the schools have online access but much of it is limited to the student alone. Hence, it is critically important that the Court Order ultimately entered have specific timing and notice provisions so the payments can proceed in a coordinated effort.

If you have any questions or need representation regarding college costs and expenses, as they relate to a divorce action, reach out to the experienced attorneys at www.wardfamilylawchicago.com.