Co-Signing for College Loans Post-Divorce

One of the most important decisions in a divorce involving children is the issue of the children’s education. Pennsylvania law considers a child emancipated at the age of 18 or when the child graduates from high school, whichever comes second, therefore PA law does not require parents­– married, unmarried, separated, or divorced– to pay for education beyond high school.

Because children over 18 and graduated from high school are considered adults in PA, the question of paying future college expenses should be written into the divorce settlement. This can be challenging, however, since the cost of college seems to increase every year. In addition, the college your child chooses can vary in price and location which could have a dramatic effect on the bottom line. Therefore, the agreement in the settlement should take these factors into consideration and provide some framework and limitations.

If you are already divorced and have not included post-secondary education costs in the divorce agreement, the settlement can be modified if both parties agree. 

There are many options for paying for a college education short of parents co-signing for a loan. We encourage you to examine all other options first. One such option is FAFSA loans, which are subsidized or unsubsidized government-secured student loans that all students are encouraged to apply for. They are based on need but do not assume your income is too high to receive some help. 

In addition, there are thousands of scholarships available. A simple online search will bring up multiple websites that provide access to many scholarships that can be searched by different factors, such as college major, ethnicity, disability, family situation, military experience, and more. 

If you find that your student needs your help with a loan, then proceed with caution. While the loan is in your child’s name and you are only responsible if your child defaults, the loan still has an impact. If you co-sign a loan, that debt will be on your credit report and will impact your credit score. And saddling your child with debt and you with a liability in the future could create tension and anxiety. 

If you have not included college expenses in your divorce settlement, then short of modification of your agreement and a court order, neither you nor your spouse can be forced to pay for your adult child’s education. However, your mutual love for your child should help you come to an agreement and work out a plan. 

Parents often give their children clear guidelines outlining how much they will help, how far away the child can go to college, and other instructions as the child researches colleges. This should be no different than if you were married. This guidance helps your children learn about finances and the reality of budgeting, valuable lessons for children to learn when they are young. If within those parameters your child’s choice of college requires you to co-sign a loan, you and your ex should make agreements about how you will each help. Maybe you could each co-sign a loan, or you each co-sign for different years. This agreement should be put in writing and made legally binding. 

Putting aside your differences and putting your child first, look at your individual financial situations, enlist your child in utilizing the available options of FAFSA and scholarships first, and then, and only then, consider co-signing. If you have any questions about this process, entering into a binding agreement, or amending your settlement, contact us at (215) 345-5259 for a consultation.