Just about every parent has a different view on paying for their children’s college education. For couples who stay together, the choice is often one made together. Some parents decide to fund the entire experience. Others can simply not afford to do so – or feel that their children should financially make their own contributions. Meanwhile, things change when parents divorce and decide to go their separate ways.
Truth be told, the court will not interfere when it comes to married couples and their decision regarding paying for college tuition. Meanwhile, New Jersey is one of 24 states and the District of Columbia that expects divorcing parents to go into their pockets when it comes to education expenses.
In best case scenarios, the parents come up with a compromise regarding college expenses. This is done during divorce negotiations and documented in the property settlement agreement (PSA). In more contentious matters, the judge may come up with a mandate that seems appropriate based on the circumstances of both parties.
Recently, the New Jersey Appellate Division ruled on a case that offers an interesting perspective. The opinion is unpublished – meaning that it solely applies to the named parties. Nonetheless, it considers the role of the child in funding college.
Paying for College: What about Student Loans?
The New Jersey Appellate Division heard the matter of M.F.W. v. G.O. on January 24, 2018, and submitted a written decision on August 2, 2018. Initials and pseudonyms are used in the case to protect their identities. Specifically, the child who is the subject of this dispute is referred to as Jane. Her mother is referenced as M.F.W., and the father is G.O.
According to the case history, Jane’s parents married in 1991 and divorced in 2003. Jane was their only child and was just five years old when her mother and father ended their marriage. The parents agreed to the execution of a PSA, which the judge incorporated as part of their final divorce papers.
The property settlement agreement contained language in anticipation of Jane’s college education when she became of age. In particular, it stated that the parties agreed that they would “contribute toward all reasonable and necessary college educational expenses based on each party's income and all other relevant financial circumstances in existence at that time."
Additionally, the PSA indicated that where Jane went to college would be part of a discussion between both parties. Furthermore, Jane was expected to “apply for all loans, grants, aid, and scholarships available to her, the proceeds of which shall be first applied to college costs.”
If you’re a parent going through a divorce, you may not like that the court can order you to pay for tuition. That said, the language of this particular PSA might not sound all that outrageous. So, what happened to bring the matter back to court when Little Jane was ready to start college?
Child Ready to Start College
At the time of their child was ready to start college, G.O. reported net earnings of $217,412. This could be interpreted as a change of circumstances since his annual income at the time of the divorce was $80,496. Meanwhile, M.S.W.’s income during the tuition debates was $89,499, attributable to both earned and unearned income. The trial court also imputed $57,148 to M.S.W. relative to inherited funds.
Jane was accepted to Georgetown University – at an anticipated cost at over $33K per semester. Her mother spent substantial money in college preparatory expenses and sought reimbursement from G.O. She also offered to split the cost of Jane’s college tuition, fees, and housing.
At the trial court level, the judge found that the parents clearly had the ability to pay for Jane’s college expenses. It appeared that G.O.’s substantial income increases signified a change in circumstances. According to case law, a judge may change the terms of an agreement based on a finding of such changes.
Upon reviewing the information presented to the lower court, the judge ordered that M.S.W. contribute 30% of the college expenses – G.O. was required to pay for 70%. Meanwhile, there was also consideration of the agreement that Jane would be compelled to potentially share in the expenses.
Interestingly, the court stated that it was "unfair and unjust" to require Jane to apply for "all loans, grants, aid and scholarships available to her" and to apply them first to the college costs because Jane "should not be bound to a contract which she is not a party to" and because the parents "have a legal obligation to support" her "and cannot compromise that obligation even if they both agree." The trial court judge termed the provision within the PSA to be repugnant – and unenforceable.
The Appellate Court Rules
Notably, there were other issues that were considered and appealed in this matter. Upon review of Jane’s obligation to contribute to her education, the Appellate Division noted that she did apply for financial assistance. However, she was denied for needs-based financial aid and only eligible for a $5500 student loan. The court interpreted the PSA to mean that Jane’s parents would repay any loans taken out on her behalf.