Divorce agreements with kids involved create a lot of things to decide, including custody, visitation and child support. It’s also common for divorce agreements to address how the kids’ college education will be paid for. The agreement may state how much each parent will contribute to college costs or, if the kids are very young, defer the calculation until a specific time when the kids are closer to finishing high school.
Sometimes, these agreements have clauses stating that the children must apply for any financial aid, grants or loans they can get. But it’s unclear if kids can really be forced to burden themselves with student loans as part of a contract (the divorce agreement) that they themselves didn’t agree to.
A recent New Jersey case suggests that the answer is “no.”
In that case, a couple divorced in 2003. Their daughter was five at the time. Under the terms of the divorce settlement, the parents agreed to pay for college, but the daughter would have to apply for loans, grants, financial aid and scholarships.
Twelve years later, the daughter was accepted to Georgetown University, which is not only extremely prestigious, but also carries a whopping price tag of nearly $70,000 per year. The mother tried to get the father to kick in his share, but he resisted and she went to court to enforce the agreement.
The father, whose net income had ballooned to $217,000 per year from $80,000 per year since the divorce, argued that the daughter should have tried to get student loans before he had to contribute, just as the agreement said.
A family court judge rejected his attempt to enforce the “loans” provision of the agreement, calling it “unfair and unjust.” He also ruled that the daughter couldn’t be held to a contract that she wasn’t party to, especially since her parents had a legal obligation to support her. Besides, said the court, the parents had sufficient financial resources to send their daughter to Georgetown.
The father challenged the ruling, but an appeals court upheld it. The law may differ from state to state, so talk to an attorney to find out how it might work where you live.