A college education provides professional opportunities but can come at a large cost. Although families often have a plan in place to cover the expense of post-secondary education, those plans are impacted if the parents go through a divorce. Parents who are in this situation may have questions about how the divorce process handles post-secondary education and the answer will vary depending on the state. In Indiana, state law provides for a divorcing couple to have an order for post-secondary educational expenses.
This court order is distinct from a child support order and focuses specifically on the costs that come with higher level education. Another key difference between the two is the fact that a child support order generally ends when the child turns 19. An educational support order can extend beyond this deadline.
How does a post-secondary educational expense order work?
The law grants the court authority to provide this type of coverage at its discretion in a manner that has the family working together as a team to help children attain higher education. The law instructs the court to consider whether each parent can provide financial support to cover these costs.
When looking at the ability of each parent to help with these costs, the law instructs the court to consider:
- Income. The court can review the income of each parent to help guide its determination.
- Earning ability. The court can also take into account the potential for a parent to bring in an income.
- Financial assets and liabilities. Other assets can also impact the court’s determination.
The court can also take the student’s ability to cover these expenses into account when making its determination. This can include a review of any funds from employment, grants, scholarships, education gifts, and education trust funds.
The court may not always find in favor of an order to provide post-secondary support. Examples where they may deny the request include situations where the Free Application for Federal Student Aid (FAFSA) program finds parents are not expected to provide any financial support or a finding by the court that such support would impose a substantial financial burden on either parent.
Is there anything else parents should know about college planning for children after divorce?
It is also important to take tax considerations into account. The Internal Revenue Service (IRS) acknowledges tax benefits to help subsidize the cost of post-secondary education. Indiana state law notes that no one party should disproportionately benefit from these credits. As such, it is important for each family to review their tax planning strategies to make sure they account for these credits in a manner that best aligns with their estate goals.
Indiana state law also encourages the court tie the financial support for post-secondary education to academic performance. If the child does not meet the minimum level of academic performance as set out in the order, the financial support may terminate.
Determinations of college contribution in Indiana is very fact specific to each family and it can take some time to address through the Courts. If you have a teenager who is considering applications to colleges and you live in Indiana, I would consult with a trusted family lawyer to discuss your particular situation and what your obligations may be before you have discussions with your co-parent.