The Journal of The DuPage County Bar Association

Back Issues > Vol. 24 (2011-12)

College Expenses in Marital Settlement Agreements: Tips and A Trap
By Timothy Newitt

Almost everyone wants their children to pursue some kind of higher education. Divorcing parents are no different. But just like every other financial issue in divorce cases, the issue of who pays and how much is frequently a difficult one. Higher education expenses present an extra difficulty because the parties seldom know where a child will go to school and how much it will cost. Since that’s the case, it is important to carefully draft the Marital Settlement Agreement to handle the potential problems this dilemma can cause, insofar as it’s possible to do so.

Higher education expenses are governed by Section 513 of the Marriage and Dissolution of Marriage Act.[1] Section 513 provides that parties may be required to contribute to the support of a child after the child attains his or her majority. “The court may award sums of money out of the property and income of either or both parties or the estate of a deceased parent, as equity may require for the support of the child or children of the parties who have attained majority in the following instances.” The statute goes on to state the two reasons for which the obligation can be imposed: the disability the child or the educational expenses of the child.[2]

Judgment of Dissolution. In many cases, a judgment of dissolution is entered before children attain their majority, sometimes many years before they attain their majority. As these years pass, the circumstances and attitudes of the parties can change. For example, a potential payor might have had a falling out with the child resulting in a reluctance to pay.[3] The parties’ financial circumstances can also change. Lots of water can go over the dam between the time the parties sign off on a Marital Settlement Agreement and a child’s graduation from high school. Leaving the issue of 513 educational expenses completely open can lead to future disputes that might at least be mitigated by a carefully drafted agreement.

Drafting the Marital Settlement Agreement. Given the problems the education expenses issue can cause years later, your author is always surprised and disappointed to see provisions in Marital Settlement Agreements that simply refer to Section 513[4] and leave it at that. Even though Section 513 now includes a fair amount of detail, it is always a good idea to put some guidelines in the agreement so the parties’ obligations are delineated as clearly as possible and are tailored to the circumstances of the particular family involved. There are also some pitfalls to avoid. The parties have the power to draft an agreement that will best suit their children’s needs and the ability of the parties to pay. The terms of a Marital Settlement Agreement prevail over Section 513.[5] Here are some suggestions on how to draft education expense agreements.

First off, don’t use the term “college expenses.” The obligation to contribute to educational expenses should be as broad as possible. I like to use the terms “Higher Education Expenses” or “Post-High School Education Expenses” or “Post-Secondary Education Expenses.” Another possibility is to list the potential types of school. Use too narrow a term and you might end up excluding a potential educational opportunity. The Marital Settlement Agreement is construed like any other contract.[6] If the contract says “college expenses,” the child might be out of luck if she wants to go to beauty school.         

The agreement should also touch on how to choose a school. Both parents and the children should have a say. The child’s wishes should be taken into consideration. The child’s ability and aptitude should be considered. When considering where a child might go to school, it’s always good to consider the parents’ history. If there is a family tradition that favors a particular school or type of school, you might want to take that into consideration. The parties might also want to exclude a particular school or type of school.

The parties can also include some limitations and general criteria. They can require maintenance of a minimum course load or grade point average. They can require that the child attend continuously until the course of study is finished. They can limit their liability to a certain number of years, for example, a four-year undergraduate degree. Section 513 actually now contains this limitation. If the parties want a different time limitation or none at all, it must be in the agreement. For example, the parties might want to allow for undergraduate degrees that take five years to complete or even provide for graduate or professional school.

The biggest issue is who pays and how much. The statute says “The court may award sums of money out of the property and income of either or both parties or the estate of a deceased parent, as equity may require…”[7] This is very broad. The parties can agree to be more specific. The obligation may be divided between the parties or among the parties and the child. The obligation may be placed on one party only. The obligation may be divided by percentages. The parties can establish a cap on the obligation. The parties may condition their obligation on the availability of scholarships loans or grants. What they can’t do is avoid the obligation altogether. The validity of this obligation has been long-settled.[8]

The agreement might also give some kind of direction about the type of school, for example state school or private school. The agreement should include a procedure for making a decision. For example, the parties and the child must confer about where the child will go to school, taking into consideration the child’s abilities, academic record, etc. It’s also possible to include a timeline for various points along the decisional sequence of events. You can put in a backstop provision that if the parties cannot agree, they can petition the court for a decision. The drawback of such a court proceeding is that it could delay the child’s entry into school.

When Problems Arise. What happens when a party refuses to pay? As in the case of any other violation of a Judgment of Dissolution, an aggrieved party can petition the court for relief, usually by means of a Petition for Rule to Show Cause. The usual case occurs when the financially disadvantaged parent has to haul the financially advantaged parent into court to make him pay. That’s trickier than it sounds. The biggest problem is deciding when to petition the court. It’s useless to do so if no decision has been made about where a child will go to school. There is no evidence to present to the court about how much it will cost. Sometimes the decision is not made until a short time before or after graduation from high school. That doesn’t leave much time to get a court decision before the child starts his or her higher education. Sometimes, one party refuses to participate in the decision. There is no easy answer to this question. The answer will always depend on the facts of the individual case.[9]

A Trap. There is, however, a potential trap connected to time of filing. The recent case of Marriage of Petersen[10] set the trap. In this case, the First District Appellate Court reversed the trial court. The judgment dissolving the parties’ marriage provided that the issue of college expenses was “expressly reserved.” The mother filed her petition seeking reimbursement from the father when the children were already well into their college educations. The oldest child had already graduated, another was currently attending college and the third was about to start. The trial court allowed the case to proceed and entered an order requiring the father to contribute seventy-five percent of all the expenses.

The Appellate Court reversed. The Appellate Court opinion turned on the fact that the issue of college expenses was reserved. The court held that because the underlying judgment reserved the issue, any subsequent court decision about college expenses was a modification of the original judgment. The court correctly held that section 513 expenses are a species of child support.[11] Given this fact, cection 510[12] controlled. Section 510 provides that a modification of child support payments can only take place prospectively from the time a notice is given to the opposite party that a petition has been filed with the court requesting a modification. In Petersen, that holding resulted in a denial of reimbursement for a great deal of the money the mother and the children had spent since the petition was filed after these expenses were incurred.

The case was appealed to the Illinois Supreme Court. The Illinois Supreme Court affirmed the Appellate Court on the issue of retroactivity.[13] The Supreme Court held that section 513 education expenses are indeed a species of child support and the section 510 therefore governed modification.[14] The Illinois Supreme Court held that the reservation of educational expenses did nothing more than preserve the status quo between the parties. Given that fact, the Judgment of Dissolution imposed no obligation on Mr. Petersen to pay these expenses. Therefore any court order imposing such an obligation constituted a modification of the judgment.[15] The court could only impose liability for expenses incurred after the filing of the petition. The  Supreme Court did allow the trial court to reallocate the remaining expenses equitably.[16] Thus the trial court could at least make the father pay all or the lion’s share of the remaining expenses.

After Petersen, there was some thought circulating among family lawyers that Petersen laid down a hard and fast deadline for any petition for higher educational expenses. Your author was at pains to disabuse his colleagues of this notion. As discussed above, it is very difficult to determine as a practical matter when to file a petition concerning higher educational expenses. Setting such a hard and fast deadline would be a bad procedural move.

The First District Appellate Court clarified the holding of Petersen in the case of Marriage of Spircoff.[17] After Petersen, the trial court apparently wanted to make sure and asked the Appellate Court for a ruling in the middle of the case. The holding in Petersen was based on the wording of the Judgment of Dissolution. That judgment reserved the issue of higher education expenses. The Appellate Court in Spircoff made clear that the Petersen holding was limited to its facts. In Spircoff, the Judgment of Dissolution clearly and affirmatively stated the obligation rather than reserving it.[18] The judgment used the word “shall.” Since the obligation was clearly stated and there was no reservation, a petition to require payment of the expenses was not a modification of the judgment. Therefore, section 510 did not govern. The section 510 limitation applies only to modifications of an existing judgment.

Drafting Choices. These cases present a drafting choice which we did not previously face. If the drafter uses the reservation language present in Petersen, it automatically results in a filing limitation pursuant to section 510. The aggrieved party cannot recover for any expenses incurred before the filing of a petition. On the other hand, if the relevant language directly imposes the obligation in the agreement itself, the limitation of Petersen does not apply.

Conclusion. What to do? It depends on who you represent. If you represent the financially advantaged party, you may well want to use the reservation language if the parties can agree to it. If you represent the financially disadvantaged party, you may not. There also may be facts unique to a particular case that indicate the use of one designation or another. In any case, the agreement should be clear that the obligation is either reserved or clearly imposed given the holdings of Petersen and Spircoff.

The practitioner is therefore well advised to carefully review the statute, the case law (especially Petersen and Spircoff) along with the facts of the particular case at hand so he or she can draft the higher education expenses section of the Marital Settlement Agreement so as to set out the obligations of the parties as clearly as possible. This will avoid trouble down the road.

[1]    750 ILCS 5/513.

[2]    750 ILCS 5/512 (a).

[3]    Marriage of Drysch, 314 Ill.App.3d 640 (Ill. App. 2nd Dist. 2000).

[4]    Ill.Comp.Stat. 750 sec. 5/513 (2010).

[5]    Fritch v. Fritch, 224 Ill.App.3d 29, 42 (Ill.App. 1st Dist. 1991)

[6]    Marriage of Doermer, 2011 IL App (1st) 101567 ¶ 27.

[7]    Ill.Comp.Stat. 750 sec. 5/513 (2010).

[8]    Kujawinski v. Kujawinski, 71 Ill.2d 563 (1978).

[9]    Marriage of Chee, 2011 IL App (1st) 102797.

[10]  403 Ill.App.3d 839 (Ill.App. 1st Dist. 2010).

[11]   Id. at 844.

[12]  Ill.Comp.Stat. 750 sec. 5/510 (2010).

[13]  2011 IL 110,984.

[14]  2011 IL 110,984 ¶ 13.

[15]  2011 IL 110,984 ¶ 15-18.

[16]  2011IL 110,984 ¶ 24.

[17]  2011 Il App (1st) 103189.

[18]  2011 Il App (1st) 103189 ¶ 17.

Tim Newitt was one of only two French majors in his entering class at the George-town University Law Center. He taught French and German after graduating from Wheaton College and taking a Master’s degree at the University of Illinois. He is a shareholder in Johnson, Westra, Broecker, Whittaker & Newitt, P.C. He has tried more than 130 cases. He plays the trumpet with the Judges’ Nite Band and the Symphony of Oak Park and River Forest.

 
 
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