Should you get a divorce to save money? Here is what the experts say

Dave Ramsey and Rachel Cruze had a lot to say after a father proposed divorcing his wife on paper to qualify his kids for in-state tuition.

Every year, families with kids heading to college start crunching numbers, and for many, the expenses don’t add up as expected. When one child wants to attend an out-of-state school while another is attending a local college, the cost difference can be huge. Many parents explore scholarships and payment plans and discuss with their kids what’s affordable. However, one dad who wrote to a popular financial show had a very dramatic idea to save money that surprised everyone.

A father recently sent a letter to “The Ramsey Show” in which he shared a tough situation he and his wife are facing. They have two kids. The older one is already taking classes at a college in their home state and benefiting from lower in-state tuition. The younger child wants to attend college in another state where the family has a second home, but it is not used as a residence. This means they would have to pay much more in tuition, since out-of-state students typically face higher fees.

In an attempt to save money, the father came up with a controversial idea that he and his wife would get a legal divorce. The plan was that one of them would claim the second home as their main residence, which would allow both of their children to qualify for in-state tuition, potentially saving them over $100,000 in college expenses over four years. He emphasized that they still loved each other and that their relationship wouldn’t change.

However, financial expert Dave Ramsey and his co-host Rachel Cruze were not on board with this plan. Rachel quickly dismissed the idea, saying that if the family couldn’t afford out-of-state tuition, they should reconsider college expenses altogether. Dave also suggested that, rather than divorcing for financial reasons, they should explain to their child that attending an out-of-state college wasn’t a viable option. He labeled the idea as “whacked” and said that trying to use divorce as a way to avoid financial difficulties is never a wise solution, and they were prioritizing the wrong things.

Rachel also acknowledged the difficulties of a teenager wanting to attend a specific school and reminded everyone that it wasn’t fair to label the child spoiled for wanting to study out of state.

What people had to say

People’s reactions weren’t exactly sympathetic to the dad’s plan. Many viewers agreed with Rachel and Dave’s view. One person wrote, “Saying NO to an out-of-state college sounds like the sensible solution. Divorce? Insane!”

But a significant number of people weren’t buying the tuition story at all. Reading between the lines, they thought the college bill was just a convenient excuse for getting a divorce. One person bluntly stated, “He wants to end his marriage without looking like a bad guy.” Another added, “No happily married man is going to say ‘Let’s get a divorce’ for any reason. He wants out.” Even though the man insists he loves his wife, pursuing a divorce just to save some money could seriously damage their relationship.

Some people also shared practical solutions. One suggested that the child should “apply for every scholarship imaginable to afford the difference.” Another advised dad to tell kids that, “You’ll give them the amount of in-state tuition, same as their siblings got, and if they want to go out of state, they can fund the difference themselves.” This approach encourages the children to take responsibility for their education while treating all siblings fairly. Also, it’s important to be transparent about finances with your family rather than taking such drastic steps.

The real cost of separations

Trying to save money on college by pretending to be divorced may seem like a smart move, but it comes with serious risks. On paper, the financial perks can look tempting. A single parent with lower reported assets might qualify for significantly more need-based financial aid through the FAFSA or other institutions. There is also the obvious win of securing residency for tuition purposes, which can significantly slash annual bills. For families already stretched thin by rising education costs, these savings can make a huge difference.

However, there are many drawbacks to this as well. University auditors and the IRS aren’t exactly fans of sham separations. If an institution discovers that the divorce is a fraud intended to inflate residency rates, the family could face demands for back pay, expulsion, or even legal charges, depending on the rules and regulations. Beyond the legal threats, there can also be other damages.

Divorce in the U.S. removes many of the automatic legal rights spouses have. Once a divorce is finalized, ex-spouses typically lose default inheritance rights, eligibility for spousal benefits like health insurance, and even affect retirement plans. Even when a divorce is done for practical reasons, the legal consequences remain fully in effect.

Overall, choosing to end a marriage to save on college costs is a risky decision that may not bring the long-term benefits you hope for.