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Divorcing? Plan now to protect your kids' college tuition funding

In the U.S., only about a third of married couples have a plan in place to deal financially with a divorce. Presumably, far fewer have considered how to pay for college after a divorce.

Yet college costs have been rising by at least 3 percent annually, according to the College Board. A year of in-state tuition, fees and room and board at a public four-year university will set you back an average of $20,770. Private schools may cost double that.

The majority of us, no doubt, find those costs daunting. If you're getting a divorce, how can you hope to stretch the budget to cover college?

Take a realistic look at your financial situation

The first step in college planning is getting started. Sit down for a hard look at your finances -- which is something you'll need to do anyway if you're getting a divorce.

Make a list of your income, expenses, and assets as they stand now, then think through how divorce will change things. You need a firm idea of how much you'll have available to spend on college.

You may have set up 529 college savings plans, investments or savings accounts. 529 plans are tax-advantaged: You don't have to pay taxes as the money accumulates or when you withdraw it -- as long as you use it for valid educational expenses.

These accounts will need to be accounted for in your divorce. Some 529 plans allow you to change the owner or beneficiary or even withdraw the funds altogether as long as the taxes are paid. Your divorce agreement should specify that 529 accounts and other funds you have earmarked are only to be used for the children's tuition.

If you don't have money socked away, you'll need to get it from other sources. That could mean taking out loans, obtaining grants and scholarships, or selling assets. If you own a shared home, you might sell the house and use the proceeds for college expenses.

Be aware that your plans might change

Reality may change your ideal college plans. If child and spousal support take up most of your income, those do need to come first. And, judges are unlikely to order your spouse to pay for unreasonable educational expenses. You may not be able to afford schools that don't offer significant financial aid.

Put in the time to apply for as many scholarships as your kids may qualify for. Be aware that educational discounts may be available for deferment or if you're sending multiple children to school at the same time. If you don't get sufficient aid from your top choice, try to negotiate. With hard work and planning, you can make college happen.

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