Edward R. Weinstein, Esq.Edward R. Weinstein, Esq.

If My Divorce Agreement Says I Shall Pay For 50% Of College Costs, Does That Stand If Our Child Seeks Student Loans?

Yes.  The divorce lawyers at our law firm here in East Brunswick, New Jersey, always make it unequivocally clear to our clients that once they sign a Property Settlement Agreement, they should expect to comply with those terms, absent later demonstrating a significant change of circumstances to a New Jersey Family Court judge.  Following is this attorney’s analysis of a recent New Jersey case discussing that, if a person agrees to pay fifty percent of college costs for their child in their Property Settlement Agreement, they are obligated to do exactly that. 

In Avelino-Catabran v. Catabran, mother Christine Ewart, previously known as Christine Avelino-Catabran, appealed from an order of the Superior Court of New Jersey, Family Part of Morris County, dated May 12, 2014, that recalculated child support and held her responsible for contributing towards half of her oldest daughter’s college costs. On appeal, Christine argued that the Family Part inappropriately excluded a Federal Direct PLUS Loan from the child’s available financial aid, when calculating her responsibility for college expenses, and should not have held her responsible for half of those same college expenses. The child’s father, Joseph Catabran, challenged his ex-wife’s contention, and argued that the Family Part court was correct to exclude the PLUS loan from their child’s contribution towards college costs, and rightfully obligated Christine to contribute towards half of the colleges expenses, as the couple had previously agreed to do so in their property settlement agreement.

Christine and Joseph got married on June 18, 1993, and finalized their divorce on August 14, 2002. A property settlement agreement was incorporated into their final judgment of divorce, in which both parents mutually agreed to share joint physical and legal custody of their two children, Catherine and Isabelle. The property settlement agreement also obligated Joseph to pay $ 137 a week in child support. In 2009, the parents agreed to raise this amount to $ 800 a month. The property settlement further stated that the parents would have an equal obligation to provide for their children’s college costs, after the child applied for financial aid.

The eldest daughter, Catherine, decided on attending New York University after graduating from high school, starting in the fall of 2012. The total cost of attendance for NYU was $ 68,768, but the university offered her a substantial financial aid package that included a scholarship for $ 12,720, $ 3,000 in work-study, and $ 7,900 in student loans. The package also included PLUS Loans for up to $ 39,148, that the award letter described as, “the maximum amount . . . . [a]parent may borrow.” It is important to note that the award letter included the language “a parent may borrow,” instead of a student a may borrow. Their daughter accepted the financial aid package in full, including the scholarship, work-study, and student loans. On June 21, 2012, Joseph sent his ex-wife an emailing asking “how much Parent PLUS Loan should we borrow?,” and suggested $ 12,770 to cover the balance owed for college costs. In response, Christine told Joseph “Please borrow this money on behalf of Catherine.” As a result of this communication, Joseph accepted $ 12,770 of the available PLUS loan.

Joseph filed a motion on October 25, 2012 and sought an order that required Christine to pay for half of their daughter’s college expenses, and a judgment against her for the past due amount on the PLUS loan they owed NYU for the Spring 2013 semester. Christine challenged the motion and claimed that she did not owe any money for Catherine’s college costs because NYU awarded their daughter enough financial aid to cover the full costs. The financial evidence submitted at the time of the motion revealed that Christine was earning about $ 225,000 a year and Joseph was earning $ 113,000, far more than the $ 73,000 a year they both earned at the time of the divorce.

The Family Part of Morris County entered an order on May 1, 2013 that stated that Christine had a responsibility to contribute towards her daughter’s college expenses, but the parents had to provide financial documentation to determine exactly how much that contribution should be. Furthermore, the Family Part court found that the financial aid package did not fully cover all the college costs, and that the Plus Loans were only available to the parents.

Christine was ordered to pay half of her daughter’s college expenses by the Family Part on May 12, 2014. The Family Part judge explained that according to the submitted financial documents, Christine had enough resources to help pay for Catherine’s college costs as she already agreed to do in the property settlement agreement. To support its decision, the Family Part reviewed the factors enumerated in the 1982 Supreme Court case of Newburgh v. Arrigo, but relied on the explicit terms of the property settlement agreement that obligated both parents to contribute equally to their daughters’ college costs. Christine appealed the decision.

The New Jersey Appellate Division explained that they must accept a determination about a parent’s obligation to contribute towards college expenses made by a Family Part court as long as: the judge’s factual findings are supported by credible and substantial evidence in the factual record, and the judge did not abuse his or her discretion. Christine argued that the failure of the Family Part to find that PLUS Loans were considered financial aid would have “wide sweeping public policy implications,” and in doing so the court would change the intent of any property settlement agreement that included this language. The New Appellate Division did not find any merit to her arguments.

The appellate panel held that the Family Part court was correct to enforce the property settlement agreement provision that held Christine responsible for half of the children’s college costs. Generally, a court must enforce the terms of a property settlement agreement unless there are “compelling reasons to depart from the clear, unambiguous, and mutually agreed to terms,” of the agreement. This is because New Jersey Courts favor the stability of arrangements in family matters. As long the terms of a property settlement agreement are fair and equitable, New Jersey Family Part courts will not unnecessarily change or disturb them. If the meaning of specific language in a property settlement agreement is in dispute, the courts job is to is apply a rational meaning to the what is written, in the context of what the circumstances were when the agreement was drafted, while keeping with the expressed general purpose. That said, a judge has the discretion to modify a property settlement agreement upon a finding that circumstance have changed in a way that if would no long be fair or equitable to enforce the agreement. Furthermore, fraud, unconscionability, and overreaching in negotiations are also valid reasons for a court to modify a property settlement agreement.

Absent unfairness or unexpected changed circumstances, a court must enforce the terms of a settlement agreement. To do otherwise would undermine and destroy the surety the parties thought they secured, and would destabilize the Court’s preference of settling marital disputes. This applies to a parent’s responsibility to contribute towards their children’s college expenses as well. While parents are not usually required to support a mature aged child, according to Newburgh, in certain circumstances, parenthood does bring with it a duty to provide a necessary education for children.

When divorced parents have mutually come to an agreement as to how a child’s college expenses will be divided, Family Part courts do not have to apply all twelve Newburgh factors. Instead the court will enforce the property settlement agreement as it was written. Here, the property settlement agreement was explicitly clear that the college expenses would be split equally between both parents.

Additionally, Christine’s contention that she was not responsible to pay for PLUS Loan was not persuasive. Catherine could not receive or even apply for the Plus Loans herself, and therefore the Plus Loans could not be considered a student loan or financial aid available to Catherine. The New Jersey Appellate Division held that the Family Part was correct to determine that Christine authorized the loan and was responsible for contributing towards it. Therefore, the New Jersey Appellate Division affirmed the Family Part’s decision about college contribution.

Please call my office if you, a family member or a friend is facing a potential divorce.  Thank you.