Financial Planning for Parents of Children With Learning Disabilities

Millions of children in the U.S. live with learning disabilities. According to the National Center for Education Statistics, 32% of the 7.3 million children who received special education or related services from 2021–22 had a learning disability, making it the most common category of disability. By seeking education about the services their children need, tapping into available resources and planning finances strategically, parents can navigate expenses related to learning disabilities and ensure their children have the support they need to thrive.

Raising a child with a learning disability can involve a variety of expenses, including the cost of diagnostic evaluations and interventions. Working with a financial advisor to build a plan tailored to these needs can help set your family up for success. We explore some of the most common costs parents may incur below.

If you suspect your child may have a learning disability, thorough evaluations are crucial to diagnosis. The sooner a test is administered, the sooner your child can access targeted support for optimal developmental outcomes. Typically, evaluations usually take the form of school-based or independent educational evaluations.

School-based evaluations are cost-effective for identifying a child's educational needs and potential interventions. The school covers most of the costs, although additional expenses might arise for extra assessments. These assessments focus on academic performance, cognitive abilities and behavior, aiming to pinpoint effective support strategies. School-based evaluations are typically conducted by a school psychologist. A diagnosis may help the school and the family develop a performance plan, usually in the form of an Individualized Education Plan (IEP).

Many parents do not want their child to have an IEP because of the misplaced belief that somehow having one will harm the child's opportunities later in life. Understand that an IEP is a supportive measure and can be important for academic success. Also, remember that IEPs only follow a student beyond high school if the student consents.

If the school's evaluation doesn't fully meet your child's needs, consider undergoing an independent educational evaluation (IEE). An IEE can provide detailed insights to develop an effective learning plan. IEEs utilize standardized diagnostic methods recognized by the American Psychological Association, ensuring a universally respected measure of your child's abilities.

However, these additional benefits come with a cost. Private evaluations can range from $1,000 to $5,000 depending on factors like the specialist's location and qualifications. Despite the expense, the comprehensive understanding and tailored strategies an IEE offers can be invaluable in supporting your child's educational journey.

Several resources can help ease the expenses associated with caring for children with learning disabilities, spanning the local, state, federal and private levels. Immediate relief is often available through government benefits like Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI) and Medicaid. Proactively apply for these aids to lessen financial burdens and concentrate on your child's development and education.

When applying for government benefits, ensure you understand its eligibility and requirements. For instance, Medicaid considers parental income and assets and not all children with significant impairments automatically qualify due to parental resources being attributed to the child's eligibility. Below are some key government benefits parents of children with learning disabilities can access:

• Medicaid: Provides health coverage based on parents' income and assets.
• Supplemental Security Income (SSI): Offers financial aid to disabled children, contingent on income criteria.
• Social Security Disability Insurance (SSDI): Supports children disabled before age 22, based on a parent's Social Security contributions.
• Children's Health Insurance Program (CHIP): Covers health care for children in families earning too much for Medicaid but not enough for private insurance.
• Individuals with Disabilities Education Act (IDEA) Funding: Provides federal funds for states to educate children with disabilities, aiding schools more than parents.

The Medical Expense Deduction allows families to deduct unreimbursed medical expenses exceeding 7.5% of their adjusted gross income (AGI). The deduction can include costs of learning disability diagnosis, necessary therapies, prescribed medications and special education services. For instance, if your AGI is $100,000 and you have $10,000 in medical expenses, you can deduct $2,500 from your taxable income, potentially leading to substantial tax savings.

Consider significant expenses like specialized equipment, as they might qualify for itemized deductions if they exceed 10% of your AGI and the standard deduction. Shifting to a 1099 work-from-home setup can sometimes offer "above the line" deductions for business-related expenses. Consult a tax advisor to ensure all deductible expenses are accurately accounted for.

The Child and Dependent Care Credit offers tax relief to parents of children with learning disabilities by allowing them to claim a portion of care-related expenses while they work or seek employment. Qualifying costs include daycare, after-school programs and day camps. The credit amount varies with your income and expenses. For example, if your AGI is $50,000 and you've spent $3,000 on eligible care, a percentage can be credited against your taxes, lowering your overall tax bill.

Note that the credit reduces as your income rises, and there are limits on the claimable amount. The child must be under 13 or incapable of self-care if older. Consult a tax advisor to help you navigate the specific conditions and maximize your benefits.

Numerous organizations offer education assistance and scholarships for students with disabilities, assisting with higher education or vocational training costs. Consult with the schools or organizations offering these scholarships and grants and local organizations — such as local chapters of national organizations — for more information about funding availability and eligibility requirements. Examples of scholarships include the Anne Ford Scholarship, Allegra Ford Thomas Scholarship and Joseph James Morelli Scholarships.

For some families, the cost of care for children with learning disabilities can be substantial. When developing a financial plan as the parent of a child with disabilities, we recommend taking the following steps:

We’ve collected resources that offer both financial guidance and practical assistance for parents navigating the financial landscape of having children with learning disabilities.

• Consumer Finance Protection Bureau (CFPB): Provides guidance on managing financial challenges and understanding consumer rights, including financial products and services that may affect families with learning disabilities.
• Federal Student Aid: Offers various grants, scholarships and loan programs to assist with educational expenses.
• FINRA (Financial Industry Regulatory Authority): Offers investor education and resources on financial planning and investment protection, which can be beneficial for long-term financial strategies for families with learning disabilities.
• IRS (Internal Revenue Service): Offers detailed information on tax credits and deductions available to families with children who have learning disabilities, such as the Medical Expense Deduction and the Child and Dependent Care Credit.
• Learning Disabilities Association of America (LDA): Dedicated to supporting individuals with learning disabilities through advocacy, education and research. Access resources for parents, professionals and individuals on coping strategies, educational rights and more at the LDA website.
• Supporting Neurodivergent People in Personal Finance: This MoneyGeek guide offers valuable guidance and strategies specifically tailored to help neurodivergent individuals manage their finances effectively.
• National Center for Learning Disabilities (NCLD): A premier advocacy group providing extensive information on legal rights, educational strategies and financial aid for children with learning disabilities.
• Special Needs Alliance: A network of disability attorneys offering free, in-depth resources on financial planning and legal considerations for special needs families.