As a family law attorney, you rely on the advanced financial knowledge and skills you received from your CFL Designation for Divorce Practitioners to reach successful negotiations. However, they aren’t always easy. Property settlements, especially those that provide for college costs as part of child support, can present unique challenges.
The New Jersey appellate court case of M.F.W. vs. G.O. involved the issue of whether the children of divorced couples must apply for college financial aid or if their parents will pay for their education. Though these provisions are typical in divorce settlements, the ruling offered another perspective on how courts could determine that financial responsibility.
After 12 years of marriage, the couple divorced in 2003 when their daughter Jane was five. Their Property Settlement Agreement (PSA) stated they would “contribute toward all reasonable and necessary college educational expenses based on each party’s income and all other relevant financial circumstances…” The PSA also called for their daughter to apply for all loans, grants, aid, and scholarships available before her parents would pay.
By 2016, Jane was accepted to Georgetown University. Though she had applied before the fall semester, she didn’t qualify for “needs-based” financial aid. Instead, she was approved for an unsubsidized student loan of $5,500.00.
Her mother, M.F.W., emailed G.O. about the more than $30,000 bill for the first semester and included a spreadsheet showing the college preparatory expenses she had paid. Jane’s father had paid $20,000 that was saved for her under the PSA for that first tuition bill. M.F.W. asked that G.O. reimburse her for the more than $11,000 she had paid. Each party later agreed to pay it in part.
M.F.W. filed a motion in October 2016 to enforce G.O. to pay 66 percent of the college expenses and she asked to pay 34 percent. She also wanted to remove the PSA’s requirement that Jane apply for loans or financial aid, and requested a $9,589 credit for the college preparatory expense payment. As part of this motion and G.O.’s counter-argument, both parties requested financial information, including their current income statements.
The trial court ordered G.O. to pay 70 percent and M.F.W to pay 30 percent of the college costs. The court also granted M.F.W. the expense payment reimbursement.
In its ruling, the Appellate Court agreed with the trial court that it was “unfair and unjust” to require Jane to apply for financial aid before her parents covered her costs because they had the means to pay. Both parents’ incomes and assets had increased from about $140,000 in 2003 to nearly $300,000 yearly combined.
The ruling added that “the Defendant 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 provision.”
Further, the court noted Jane’s application for financial aid and student loan approval, and that the court’s order allows grants and scholarships to be used to reduce college expenses. “We cannot say, given the parties’ incomes, that the court erred by not requiring Jane to obtain loans or other financial aid where she would be financially obligated to repay the funds in the future. Her parents had agreed to pay for her college expenses under the PSA. This would include any loans to pay those expenses.”
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