After Our Divorce, How Does a 529 College Savings Plan Factor into Our Child's College Expenses?

Illinois Divorce Lawyers Answer Your Questions About Paying for College

College savings plans, including those authorized under Section 529 of the Internal Revenue Code, must be considered when a court is determining whether divorced parents will be ordered to help their child with college expenses. Any college savings account created before the parents' divorce is considered to be a financial resource of the child.

According to Illinois law, divorced parents can be required to help their children cover the costs of attending college or other post-secondary education programs. In making a determination regarding such help, courts in Illinois must consider the financial resources and needs of each parent, as well as the financial resources of the child.

What Are 529 Plans?

Section 529 of the Internal Revenue Code authorizes certain savings plans to be created for the purposes of funding post-high school education. These plans—known as "qualified tuition plans"—are afforded tax advantages, and they are often sponsored by state agencies and individual schools and universities. For example, a 529 plan can be used to "lock in" current tuition rates at a public college for a student who plans to attend that school in the future.

When determining whether to order divorced parents to help their child pay for college, the court will consider money in a 529 plan to be a resource that belongs to the child. Any contributions made to a plan by a parent after the order is entered will be considered part of that parent's contribution toward the child's college expenses.

To learn more about a child's contributions to his or her own college education, please see our FAQ video "Will My Children Be Expected to Contribute to Their Own College Expenses?"

Parents should understand when they may be required to help their children pay costs related to their college education. After considering what resources will be available to the child, including college savings funds, money they have earned on their own, and scholarships and grants they have received, a court may determine that some or all of the remaining costs will be shared by the child's parents. A parent who is ordered to contribute to these expenses may make payments to the child, to the other parent, or to a trust where funds will be held, or they may make payments directly to a college or university.

In addition to considering the needs of the child as they pursue their education, the amount that a parent may be required to contribute will depend on their own financial resources. There are limits on how much a parent may be required to pay, and the parents' share of college expenses generally cannot be higher than the costs the child would need to pay if they attended the University of Illinois at Urbana-Champaign during the academic year in question.

Contact Our DuPage County Divorce Attorneys for Non-Minor Support

If you are the divorced parent of a child who will soon be headed to college, an experienced family lawyer can help you understand all of your rights and responsibilities. Contact our office by calling 630-665-7300 and schedule your confidential consultation today.