College Planning and Mediation: Part I

As parents of high school seniors already know, January and February are the deadline months for many college applications. This can be a financially stressful time for any family. For families going through divorce, the stakes can be even higher.

Mediating College Contributions

Whether you have a child who has just clicked “submit” on the last application or a child who is still in preschool, put college planning on your divorce mediation schedule. An experienced New Jersey divorce mediator will be knowledgeable about possible ways to cover the costs of your child’s future education and can help you build a plan into your marital settlement agreement (MSA). If you have disagreements about your plan, mediation is a good vehicle for working those out. If you have questions, this is the time to get them answered.

Does New Jersey Require Divorced Parents to Pay for College?

Parents who know that they will come through their divorce in good financial shape often take it for granted that they will voluntarily contribute to college costs for their children. Parents facing financial shortfalls, however, may be wondering about their legal obligations.

New Jersey requires more of a commitment from parents whose children choose to attend post high school education than most other states. Although the child support guidelines do not apply to children who are no longer living with a parent full-time, even if those children are still attending school, the long-standing case of  Newburgh v. Arrigo, 88 N.J. 529 (1982) clarifies that, “in general, financially capable parents should contribute to the higher education of children who are qualified students.”

Under current New Jersey law, child support payments generally end by a child’s 19th birthday, unless certain exceptions apply. One such exception is the child’s pursuit of ongoing full-time education. This can include vocational or technical school, as well as undergraduate or graduate degree programs. A parent’s obligation for financial support ends completely, however, once a child turns 23, even if the child is still in school.

The Newburgh Factors

The Newburgh case lays out a number of specific factors a court will consider when there is a dispute regarding the obligation to contribute to college. These include the following:

How Judges Apply the Newburgh Factors

Judges applying these factors look at things like the family history of payments for other children; and whether or not the parents have college degrees themselves. If other children or the parents themselves attended private colleges and the parents have the means to pay for private college, courts won’t necessarily restrict required contributions to the cost of a public university. The relationship between a child and a parent can also be important. Children are expected to comply with reasonable standards parents may set, such as maintaining a full course load and a satisfactory grade point average. The most important consideration is the parent’s ability to pay. Courts generally consider contributions to college tuition to be a higher priority than things like lavish vacations or expensive cars, but not as high a priority as a parent’s basic financial security.

Agreements to Contribute to College Costs

Reaching an agreement on college contributions during divorce mediation can keep you out of court when the bills come in. If your children are young, you might be tempted to postpone this discussion to a later time, but that is probably unwise. Divorce mediation is the ideal time to examine each parent’s future ability to pay for college in the context of anticipated income and distribution of property in the divorce. Going back and addressing the issue after everything else has been decided could be difficult. Getting a commitment is especially important if you are the lower earning parent. You will have the most leverage before your divorce is final, when you can raise the college contribution issue as part of the overall settlement discussions. If you wait, a judge might order the other parent to contribute, but only after the aggravation and additional expense of going to court.

In discussions about alimony, child support, and property distribution, the focus is on all available income and all assets, including checking and savings accounts, brokerage funds, savings bonds, retirement funds, life insurance cash value, home equity, other high value personal assets, and business assets. In that context, you can consider how college contributions might impact the rest of your financial planning. For example, does contributing to college savings mean you can pay less alimony? Will you need to live in a smaller home or take fewer vacations to be able to set aside money for contributions?

Including Children in Discussions

Think about when and how you will include your child in college planning discussions. Children below high school age are unlikely to be able to put the high costs of college into any meaningful context. Once a child is 16 or 17, however, you can sit down with them and explain things like how those costs line up with your family’s financial means, as well as with your child’s anticipated future income and ability to repay any loans under consideration. This is the time to specify a “cap” on total contributions, and to explain that the cap will apply even if the student decides to transfer or extend education beyond current plans. If your child is a junior or senior in high school, include them in discussions at the outset. Ideally, they should know about any financial restrictions before they start their college application process.

Building Future Meetings into an MSA

If you are able to include a comprehensive plan in your MSA, you may be able to implement the plan without any serious future disagreements. Most parents, however, will need to have several discussions about details in the future. If your children are still very young, there is more of a chance that things will look differently by the time they are ready to start planning for college. In that case, it may be best to have an outline of a plan but leave some of the details to be filled in at a later date.

To avoid a future stand-off that could end up in court, build future planning into your MSA.  Set a specific future date for a college planning meeting between the parents and another future date for a meeting that includes the child. These meetings don’t necessarily have to be with a mediator. Parents who are amicable and able to co-parent successfully around many issues may find that discussions between themselves go fairly smoothly. Even if you are amicable now though, that doesn’t mean it will be easy to stay that way if you have different ideas or a difference in available resources. Regardless of how comprehensive a plan you have in your MSA, include a clause that requires you to return to mediation in the event of a future disagreement about college contributions before either of you is able to file any papers in court.

Preparing a Checklist for Discussions

In our next post, we will address this topic in greater detail, so that you will have a checklist of categories to cover in any financial planning meetings about college contributions. If you and your spouse or former spouse would like to discuss this topic with one of our experienced family mediators now, take advantage of our initial consultation and contact us today.