By Joseph P. Cadicina, Esq.
The Courts in the State of New Jersey have recognized an obligation on the part of divorced parents to be responsible for contribution towards the college educational expenses of their children. The theory is based upon the fact that children should be provided with the opportunity to obtain a college education regardless of their parents' marital status. This issue has been litigated in various fashions. Over the years, the Courts have consistently determined that divorced parents have an obligation to contribute towards the college education of their children. The most important case on this issue was decided in Newburgh v. Arrigo case, 88 N.J. 529 (1982). In the Newburgh case, the Court established factors that must be considered in determining a parent's claim for contribution towards college education. There are 12 factors established by the Court, which are as follows:
- Whether the parent, if still living with the child, would have contributed towards the costs of the requested higher education;
- The effect of the background, values, and goals of the parent on the reasonableness of the expectation of the child for higher education;
- The amount of the contribution sought by the child for the cost of higher education;
- The ability of the parent to pay that cost;
- The relationship of the requested contribution to the kind of school or course of study sought by the child;
- The financial resources of both parents;
- The commitment to and aptitude of the child for the requested education;
- The financial resources of the child, including assets owned individually or held in custodianship or trust;
- The ability of the child to earn income during the school year or on vacation;
- The availability of financial aid in the form of college grants and loans;
- The child's relationship to the paying parent, including mutual affection and shared goals as well as responsiveness to parental advice and guidance; and
- The relationship of the education requested to any prior training and to the overall long-range goals of the child.
These factors are taken into consideration by the Court in determining the amount of each parent's contribution towards the college education of their children. Obviously, the greater the parents' financial resources, the greater their contribution will be towards the college education expenses. However, a parent's voluntary and/or involuntary decision not to be employed is also taken into consideration by the Court in determining that parent's obligation. In the event that a parent is voluntarily unemployed, the Court has the ability to impute income to that parent in order to determine the non-employed parent's obligation.
Each case is very fact sensitive and must be weighed against the factors established in the case of Newburgh v. Arrigo. There is often litigation between the parties regarding the issue of contribution towards college education. For instance, the Courts have also recognized what has been commonly referred to as "The Rutgers Rule," which attempts to limit the parent's financial contribution towards college education to the cost established by a State University, such as Rutgers. The Rutgers standard is often applied when the divorced parents have limited income and resources to contribute towards the college education of their children.
The Rutgers Rule is not an absolute limitation on a parent's ability to contribute, and it can be a position advanced to the Court and/or negotiated in a Property Settlement Agreement. Due to the fact that the majority of divorce cases resolve themselves by way of Property Settlement Agreements, the parties must take into consideration the future college educational expenses for their children. In many cases, the attorneys tend to include language in the Property Settlement Agreement that simply states "the parties agree to contribute towards college education of their children commensurate with their ability to pay and the case law established at that time."
It is often necessary to include such language because the children may not be of age to attend college. Therefore, the parties will be required to discuss the issue of college education and its expenses when the children are almost ready to attend college. If the parties cannot agree upon a school and/or the allocation of the college educational expenses, then they will be required to file a post-judgment application with the Court in order to have the Court conduct a hearing to determine each parent's responsibility towards the college educational expenses.
The Court will take testimony from the parties and the child in order to determine the facts and circumstances of the particular case. The Court will then compare those facts and circumstances with the factors established in Newburgh v. Arrigo in order to make a determination as to each party's contribution. Unfortunately, at the time of the divorce, it is extremely difficult for the parties to agree on an exact percentage towards the contribution for the college educational expenses. Therefore, the parties are required to litigate the issues unless they are able to resolve the choice of college and the cost without the Court's assistance. However, due to the animosity which often exists, both during and after the divorce, it is often necessary to litigate the issues in a trial.
In order to avoid this type of litigation, parents often agree in the Property Settlement Agreement that each will contribute a certain amount of money on an annual basis towards a college educational fund. If the parties are able to contribute towards an educational fund for the child, there may not be a need to determine the college educational contributions of the parents because the child may have sufficient funds to pay for his or her education.
If at all possible, it is recommended that this type of arrangement be made at the time that the parties enter into the Property Settlement Agreement. However, neither party is required or obligated to agree to any contribution towards a college educational fund. Therefore, a college education contribution account is often resisted by one party and not included in the Property Settlement Agreement. Thus, the parties should be open-minded in considering the establishment of such a fund to avoid costly litigation in the future.