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NJ Family Legal Blog Pertinent Information As It Relates To New Jersey Family Laws

GRADUATE SCHOOL – WHO PAYS?

Posted in Child Support, College

An often addressed issue between divorcing parents is who is going to pay for the children’s college education and related expenses, and in what proportion.  When the issue is litigated, a court will generally look to the twelve factors enunciated in the Supreme Court’s 1982 Opinion of Newburgh v. Arrigo.  Resolutions between parties may include a number of possibilities, including dividing the costs in proportion to the parents’ respective incomes, abiding the event, etc.  Settlement agreements also typically contain language requiring the child to apply for scholarships, grants, loans and other forms of financial aid to stem the blow.  College funds or other types of savings accounts might have been established for the children that are to be applied before any additional financial obligation befalls on the parents. Each of these different mechanisms is designed to protect the children, ensure proper education, while also considering the parent’s financial circumstances as well, which are often altered following a divorce due to additional expenses, new families, legal fee debt and the like.

The next question, forming the basis of this blog post, is what obligation do parents have to contribute to graduate school?  Does a parent have an obligation to pay for a child’s law school tuition?  How about medical school?  This infrequently addressed issue in the court system was recently taken on by the Appellate Division in Schambach v. Schambach, a very interesting decision containing an analysis in a concurrence/dissent that merits in-depth discussion.

The parents in Schambach had a daughter, who was in high school at the time of the divorce.  Resolving the issue of anticipated college and post-graduate education expenses prior to trial, the parties entered into a Consent Order that I quote below for a greater understanding of the nuance involved:

With regard to college expenses, it is acknowledged that there is a college fund

for Jessica in the amount of $100,000.00.  The wife shall continue as trustee for

Jessica and to administer and account for the funds upon consultation between the

parties. Sixty five percent of the fund balance as of the date Jessica graduates

from high school shall be applied to her undergraduate college expenses which shall be defined as tuition, room and board, books and fees. . . . Jessica will be obligated, upon expiration of the 65% of funds applicable to her college expenses, to apply for college related financial aid and she shall accept a maximum $5,000.00 per year student loan as her personal contribution towards the aforementioned college expenses. When the fund has reduced by 50%, the parties will, within thirty days, exchange formal Case Information Statements, prior two year tax returns and proof of year-to date income and shall within sixty days thereafter, negotiate the issue of college contributions by the parties to Jessica’s additional college expenses for undergraduate studies. Any shortfall for college will be an obligation of the parties until Jessica obtains her undergraduate degree.  Contributions by the parties (beyond the 35% of the fund) are voluntary only. It is anticipated that 35% of the trust fund shall be applied to Jessica’s post graduate expenses or if Jessica does not attend college post graduate, this sum shall be paid to her at the age of twenty-five. In the event Jessica fails to graduate from college, it is expressly agreed that any loans incurred by either party for her college expenses shall be reimbursed to that party from the trust account before the distribution of the thirty five percent

balance to Jessica. [(Emphasis added.)]

After obtaining her undergraduate degree, the daughter then attended law school, obtaining substantial loans to help pay for same.  Motion practice ensued with the father filing to terminate child support based on his claim that the daughter was emancipated.  Mom requested that Dad repay for his share of the daughter’s college student loans and contribute to her law school tuition.  While declining to decide whether a child is entitled to pursue graduate school and whether the parents are obligated to provide a contributing share absent a parent’s consent, the Appellate Division majority opinion concluded that the trial court had to determine if the above-quoted Consent Order constituted an agreement that the parents would contribute to the cost of graduate school education. 

The majority also critically noted that a determination must be made as to whether the daughter was emancipated, which is generally a fact-based inquiry based on whether the child is no longer within the sphere of "parental influence."  Differing from the concurrence/dissent, the majority found that the issues of emancipation and child support were not resolved by the facts in the existing record. 

Focusing largely on the emancipation issue, the concurring/dissenting Judge concluded that it was difficult to view the daughter as unemancipated considering her status as a full-time, independent law student.  She lived on her own in an apartment in New York City inherited by Mom and had no known disability that could be deemed to extend her dependency on her parents into adulthood.  To that end, the Judge stated:

It is even more difficult to view [the daughter] as an unemancipated child, without "an independent status of . . . her own," when one considers that, within months of the termination of child support as ordered by the court, she will be expected to serve clients as their lawyer.  One would think that law schools are not typically enrolling children who are still fundamentally dependent on their parents, but young adults capable of living independently and supporting themselves.

Quoting from Newburgh, the Judge noted that in "appropriate circumstances," parental responsibility may include post-graduate education.  However, the Judge also noted Newburgh’s conclusion that a child reaching the age of majority establishes "prima facie, but not conclusive proof of emancipation" and that generally there is no duty to provide support after the age of majority.  Since a child is presumed emancipated when the child reaches the age of majority and is no longer in high school, the burden then shifts to the parent opposing emancipation to prove that the child is still within the parental influence sphere referenced above. Based on the language quoted at the outset of this blog post from the parties’ Consent Order, the concurrence/dissent concluded that the parties were obligated to fund almost all undergraduate schooling, but that any post-graduate schooling beyond the $35,000 set forth in the Consent Order would be fully voluntary. 

In finding erroneous the trial court’s opinion to continue child support, for reimbursement of the daughter’s undergraduate student loans, and for payment of tuition and related expenses for law school, the concurrence/dissent found that the emancipation burden of proof was improperly placed on Dad, rather than mom. The Judge also concluded that the trial court incorrectly presumed that a child is entitled to such post-graduate contributions from her parents, also focusing too heavily on Newburgh’s "needs of the child" factor. Finally, the Judge found that the trial court misapplied the terms of the Consent Order, since the parents agreed-upon voluntary obligation towards graduate school beyond the $35,000 in the fund implied an agreement that the daughter would be emancipated after obtaining her undergraduate degree. 

To that end, the concurrence/dissent found that sufficient for Dad to prove changed circumstances entitling him to a termination of child support by showing that the daughter had reached the age of majority and had graduated from college, and that the trial court improperly presumed that a child continuing education is also entitled to continuing child support.  The Judge concluded that, at that point, the burden should then have been placed on Mom to show the daughter was, in fact, not emancipated.  Examining the Mom’s proofs, it was found not enough that the daughter was still in school and needed her parent’s financial assistance with tuition and related expenses.  The Judge rationally reasoned that, if such proof was all it took to establish a parent’s financial responsibility, then the period of non-emancipation could be practically indefinite, especially since parents will often make financial contributions to a child’s life, living expenses, etc. well into the child’s adulthood. In a notable conclusion, the Judge found that the “needs” factor in Newburgh should “diminish” with a growth of the child’s independence, especially to protect parents who cannot waive a child’s right to support.  

While the majority opinion did not truly address the substantive nature of a parent’s obligation to pay for graduate school in conjunction with emancipation and child support issues, the concurring/dissenting opinion raised many fascinating points which, upon closer review, appeal to a common sense, practical approach towards a rarely explored issue that will likely garner greater attention in the future.

Because there was a dissent, this matter must be reviewed by the Supreme Court if a further appeal is taken.