College Contribution in the wake of Avelino-Catabran v. Catabran
The July 2016 decision of Avelino-Catabran v. Catabran, 445 N.J. Super. 574 (App. Div. 2016) proved to be another precedential decision in the body of New Jersey college contribution cases. Specifically, Avelino-Catabran served to raise the level of consciousness for family law attorneys and clients alike, relative to the clear, plain language of litigant’s matrimonial settlement agreements, and how lack of ambiguity may in fact prove the proverbial Achilles heel when seeking contribution to, or modification of, a college contribution obligation.
In Avelino-Catabran, the parties’ agreement provided that the parties would be equally (50/50) responsible for the “net college expenses – those remaining after the children applied for financial assistance,” for the two (2) children born of the marriage. Common to most matrimonial settlement agreements, the Avelino-Catabran agreement stated that the two (2) children would have an affirmative obligation to apply for any and all scholarships, student loans, grants and financial aid that might be available to them to assist in the defraying of their college attendance. Once those forms of aid were applied for by the children, both parties would then be responsible for the balance, or net college education costs of each child. (Note the use of specific division of net college expenses equally (50/50), as opposed to the more “standard” language of parties determining their respective college contributions, i.e. each party’s ability to pay at the time each child enters into college). At the time of divorce in the Avelino-Catabran matter, both parties earned in equipoise at $73,000 per annum. By the time this matter came before the Court relative to college contribution issues, the Mother was earning approximately $225,000 per annum and the Father was earning approximately $113,000 per annum.
The parties first (1st) child commenced attendance at NYU in 2012. At that time, the cost of NYU tuition totaled approximately $62,000 per annum. The parties’ first (1st) child was offered a financial aid package totaling $23,000 which was comprised of scholarship monies, participation in a work-study program, and student loans. The child’s package also included approximately $39,000 of Parent PLUS loans which, pursuant to the award letter regarding same, was the maximum sum a parent could borrow. The parties’ daughter accepted her $23,000 financial aid package. The Father then sent an email to the Mother asking how much of the $39,000 PLUS loan the parties’ should borrow. The Mother responded to the Father stating that they should borrow $13,000 so as to cover the Mother’s share of the balance owed towards the parties’ college contribution. As such, the Father accepted the PLUS loan provided.
In a subsequent post-judgement application filed by the Father for various forms of relief, included therein was a request that a judgment be entered against the Mother for the amounts due on the PLUS loan for the Spring 2013 semester. The Mother took the position that she owed nothing towards the PLUS loan because the parties’ child had received financial aid to cover the total tuition expense. The Trial Court’s review of the matter found, however, that the financial aid was insufficient to cover the child’s full college costs. As such, the Trial Court found that based upon the email exchange between the parties, the Mother was aware of the financial aid package and the PLUS loans, and most importantly, that the Father was taking said loans to cover the Mother’s share of the college costs.
The Mother filed a motion for reconsideration of the Trial Court’s Order which was denied. The Trial Court ultimately found that not only did the Mother have sufficient resources to contribute towards college, the plain language of the parties’ settlement agreement also called for the equal (50/50) payment of college.
Displeased with the Trial Court’s ruling, the Mother appealed. The Appellate Division affirmed the Trial Court’s ruling holding that the plain language of the parties’ underlying settlement agreement requiring both parties to be equally (50/50) responsible for the college expenses of the children was in fact sufficient, and that regardless of the the Mother’s bankruptcy filing, no deviation from the Agreement was warranted. However, the Appellate Division disagreed with the Mother’s position that the PLUS loan should be attributed to the child because the child was not eligible to apply for, or receive, said loans on behalf of herself. Thus, the Appellate Division held that the Mother correctly authorized the retention of the PLUS loan and as such, that she was responsible for the payment of same.
While the parties’ disputes in this matter involved issues surrounding college contribution and recalculation of child support issues resulting from same, this case truly stands for the principals of careful drafting of Agreements for practitioners, and an understanding by litigants of the benefits, and pitfalls, associated with the plain language and enforceability of settlement agreements.