Can student loans be required to reduce parental college tuition obligations? 

When parents agree to share college costs as part of their divorce settlement, it can be at a time when their children are younger and college is still in the far-off future. 

But time marches on, and someday those same young children will be young adults getting ready for the next big step in life. As your child decides on which college or university to attend, it is time to look back at those college cost sharing agreements. Does your agreement obligate you to pay 20%, 50%, 80%, or even all of your child’s tuition?

Whatever the share, it’s natural to explore how to minimize costs. Grants and scholarships awarded to your child can help to bring down your child’s tuition bill. But even with a few breaks, college tuition, even at state colleges, can still be steep. So what about student loans? Can you ask your child to take out loans to help defray how much you and your former spouse must pay? Your property settlement agreement (PSA) might even include language that your child is required to apply for college loans. Is this kind of language enforceable by the courts?   

The answer to this last question is no, according to the recent New Jersey Appellate Division opinion in the matter of M.F.W. v. G.O., a case that found if co-parents have means to pay, then children can’t be forced to take out loans.

The case involved parents who divorced in 2003 when their daughter was 5 years old. Their settlement included an agreement that parents would pay for their daughter’s college education, and would share these costs. The agreement also included language requiring the daughter to “…apply for all loans, grants, aid and scholarships available to her; the proceeds of which shall be first applied to college costs.”

Who pays for Georgetown?

Thirteen years after her parents’ divorce, the daughter was accepted at Georgetown University, one of the nation’s most prestigious colleges. It’s also one that comes with the price tag of over $66,000 per year. The mother sought the father’s contribution for college costs (and some pre-college costs), as stated in their divorce agreement. The father refused to pay and the mother eventually filed an enforcement motion. 

One of the father’s main defenses in not paying was that his daughter should have been required to obtain student loans to lower his overall obligation, as stipulated by a clause in the agreement that their daughter should apply for “all grants, scholarships and loans available to her.” At the time the mother filed an enforcement motion, the father’s annual income was $217K, and the mother’s income was $87K. 

Daughter “should not be bound to a contract which she is not a party to”

The judge rejected the father’s request to require his daughter to obtain student loans per the divorce agreement, noting that was:

“unfair and unjust” to require [daughter] to apply for “all loans, grants, aid and scholarships available to her” and to apply them first to the college costs because [daughter] “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 court found this provision of the PSA requiring the daughter to apply for loans to be “repugnant and will not be enforced.”

The father appealed this ruling, but the Appellate Division agreed with the trial judge’s assessment.

Furthermore, the Appellate Division observed that the father “acknowledged that ‘[t]he parties both have significant financial resources and can afford to send their daughter to Georgetown University.’ The court did not err by not enforcing this position.”

What this means for how much college tuition you will need to pay

The leading case on the topic of college tuition obligations, Newburgh v. Arrigo, 88 N.J. 529 (1982), makes it clear that: “in general, financially capable parents should contribute to the higher education of children who are qualified students.” The Newburgh case also lays out a number of specific factors the courts may look at in determining the obligation of a parent to pay, should the parent object. These include considerations such as:

•Whether the parent, if still living with the child, would have contributed toward the costs of the requested higher education;

•Effect of the background, values and goals of the parent on the reasonableness of the expectation of the child for higher education;

•Amount of the contribution sought by the child for the cost of higher education; and

•Ability of the parent to pay that cost.

Looking to Your Divorce Settlement For Guidance

Most divorce settlement agreements contain some language that addresses college decisions and payments, with the exact contribution amounts typically calculated at the time a college is chosen. As a general rule, it’s never a good idea to agree to a straight 50/50 split of college tuition at the time of divorce, especially if your children are very young. You never know what your financial situation will be ten, even fifteen years into the future.

And, as the  M.F.W. v. G.O. highlights, any language about student loans could be viewed by unenforceable if parents of are financial means to pay the cost of the tuition.

As with all aspects of your divorce settlement, give careful thought to how college is addressed, no matter how far off it may be.  

Getting a divorce and have questions about college tuition agreement language? Have a kid going off to college and not sure how to apply the terms you both agreed to in your divorce, or have a former spouse refusing to pay? Schedule a free consultation today to speak with a qualified family law attorney. Safeguard your future. Call us at 888-888-0919, or click the button below. 

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Read more: 

When Divorced Parents Disagree About College Tuition Costs: Who Pays?

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