New Ruling Affects Contracts Regarding Paying for Kids’ College

Parents need to craft contracts carefully in order for them to be fair and binding

College TuitionWe know that under California law there’s no obligation to pay for college, nor any obligation to pay child support for a healthy adult child past age 18. However, parents can voluntarily make agreements regarding college tuition or other expenses on their own and have the court include those agreements in their divorce decree.

A recent Appellate case in the area of divorced parents paying for kids’ college education highlights the fact that parents need to be extremely careful in the phrasing of any support agreements or contracts that may be incorporated into their divorce decree. The ruling in the case sets a new precedent in California law that the court can change agreements in equity regarding splitting college unless those agreements specifically state that they are non-modifiable.

The case involved a couple who divorced in 2001. At that time both parents were making 6-figure incomes as attorneys. They created their own support provisions in a Marital Settlement Agreement which was incorporated into the final judgment in their divorce. These provisions included an agreement that the parents would split the cost of college for their three children.

A dispute arose concerning the obligation to pay for one of the kid’s college after the mother become disabled and her annual income dropped to $23,000. Initially, the court ordered that it lacked jurisdiction to let the disabled mother off the hook, in part because the college tuition provisions were not specifically labeled “child support” in the MSA. However, upon appeal the judge ruled that the court did indeed have the power to modify the agreement regarding college tuition because it was included under the heading of “family support” in the MSA, which is an umbrella term including child support and spousal support. The court took the view that if the parents had intended for the order to be non-modifiable and binding they should have designated it as such in the agreement.

We have always known that parents can sign contracts to agree to various things and certainly agree to pay some half or part of college education under various circumstances. I have advised many parents about this issue in the past. When making such agreements, it is vital to consider every possible eventuality, including some sad possibilities that we hope will never happen:

  • The possibility that a child will cut off contact with the parent
  • The possibility that the child could become a drug addict
  • The possibility that a child might not maintain a reasonable grade point average or push forward diligently to graduation
  • The possibility that a child might get admitted to an Ivy League college that could cost in total a million dollars
  • The possibility that a child might want to go to graduate school

Planning for these possibilities in advance can make the agreement more comprehensive and more useful, and prevent the need for court disputes later on.

Remember, under no circumstances sign something without competent legal advice!