It's no secret that the New Jersey family courts have a very progressive view on a child's need for post-secondary education. More often than not, divorced parents are ordered to contribute to their children's college costs, and in many cases, even their graduate school expenses. Divorced parents, however, are no different from married or single parents in the struggle to come up with the funds. The vast majority of them will have to consider taking out loans, even if their children manage to obtain scholarships, grants and financial aid in their own name.
Taking out loans on someone else's behalf is an extremely important decision with long-term financial consequences. It's imperative that parents understand these consequences, as well as who is ultimately responsible for them. For divorced parents, they must also consider whether they are obligated to take out such loans, and if so, what portion of the loans is their responsibility, versus the responsibility of the other parent and/or child. The answer to the first question may be answered by your divorce agreement, which may have specific language pertaining to college loans. For example, if your agreement states something to the effect of net college costs being split by both parties, then you may have to take out loans on behalf of your child in order to pay for your half of the obligation.
The second question is much more complicated, because it depends on your personal circumstances as well as the divorce agreement. Many divorce agreements mention the need for the child to apply for any and all available scholarships, grants and loans. These would be in the child's name only, but that's where the problem with loans comes in. Federal loans are generally available to all students, but private lenders can impose terms which your child may not be able to meet. Most financial aid packages consist of both types of loans, which can result in confusion over who is ultimately responsible for them. Like any loan, you bear responsibility if you are a co-signer, hence late and missed payments will effect your credit score. This is more than a remote possibility unless your child manages to find a well-paying job right out of school, and doesn't experience major financial hardships until the loans are fully paid off.
While the courts are aware of these pitfalls, it will ultimately depend on the language in your divorce agreement. Barring a qualifying change in circumstance, splitting the net costs of college typically means doing whatever is needed to come up with your half of the costs. If there's no specific language in your agreement, the courts will have to make a decision based on statutory and case law, and your own unique circumstances. As you can see, this is a complex legal issue that should be discussed with an experienced family law attorney. For more information on paying for college costs as divorced parent, please speak with the attorneys of Villani & DeLuca, P.C.