Court Opinion

ID: 4278431
Source: CourtListenerOpinion
Date Created: 2018-05-25 14:03:44.357575+00
Date Added: 2024-06-11T09:18:59.830322
License: Public Domain

IN THE SUPREME COURT OF IOWA
                             No. 16–1794

                          Filed May 25, 2018

IN RE THE MARRIAGE OF LYNN MARIE LARSEN AND ROGER
WAYNE LARSEN

Upon the Petition of
LYNN MARIE LARSEN,

     Appellee,

And Concerning
ROGER WAYNE LARSEN,

     Appellant.

     On review from the Iowa Court of Appeals.

     Appeal from the Iowa District Court for Story County, Michael J.

Moon, Judge.

     A father requests further review of a court of appeals decision

affirming award of a postsecondary education subsidy. DECISION OF

COURT OF APPEALS VACATED; DISTRICT COURT JUDGMENT
REVERSED AND REMANDED.

     Erin M. Carr of Carr & Wright, P.L.C., Des Moines, for appellant.

     Nicole S. Facio of Newbrough Law Firm, L.L.P., Ames, for appellee.
                                    2

WIGGINS, Justice.

      In this case, we consider Lynn and Roger Larsen’s parental

responsibility for postsecondary education for their daughter following

the dissolution of their marriage. As part of the dissolution proceedings,

the parties entered into a partial stipulation regarding financial

contributions toward their daughter’s postsecondary education.      When

their daughter began to attend college at Iowa State University (Iowa

State), they could not agree on the proper amount owed by each parent

to support her education.    On Lynn’s motion and after an evidentiary

hearing, the district court entered an order requiring the parents to each

pay $6629.73 toward their daughter’s education for the 2016–2017

school year.

      Roger challenges the amount of postsecondary education subsidy

the court ordered.   Roger claims the court improperly calculated the

reasonable costs for only necessary expenses by failing to consider actual

costs and by improperly including sorority dues and a cash allowance.

With respect to the daughter’s available resources, Roger argues the

court failed to include the full amount of scholarships awarded, failed to

include available but unaccepted unsubsidized student loans, and failed

to include an amount for income that could be generated by the daughter

from part-time employment during the school year and summer

employment.

      We transferred the case to the court of appeals.      The court of

appeals affirmed. We granted further review. For the reasons expressed

below, we vacate the decision of the court of appeals, reverse the

judgment of the district court, and remand.
                                    3

      I. Factual and Procedural Background.

      Roger and Lynn Larsen married in 1995 and divorced in 2015.

They have three children, including a daughter named H.M., who was

born in October of 1997. H.M. enrolled in Iowa State for the 2016–2017

school year. Lynn earns approximately $77,000 a year from her job at

Iowa State, while Roger earns approximately $110,000 per year from his

job with the Iowa Department of Transportation and from his service in

the military reserves.

      During the course of their marriage, Lynn and Roger set aside

funds for each of their three children for educational expenses in § 529

accounts.   See I.R.C. § 529 (2012) (establishing tax-free educational

accounts for college expenses). The balance for H.M. was $63,107.24 on

March 31, 2015.

      As part of the dissolution proceedings, Lynn and Roger entered a

partial stipulation. Of importance, the partial stipulation stated in the

event any of the three children attended a course of study or training

beyond high school as contemplated by Iowa Code section 598.21F

(2015), each of the parents must contribute to the applicable costs. The

partial stipulation further stated the § 529 accounts for each child must

first be used to discharge Lynn’s and Roger’s respective shares of their

postsecondary education subsidy contributions.     They “acknowledge[d]

these accounts are for the children and will not be used for any other

purposes or withheld from any of the children.” The partial stipulation

stated Lynn and Roger could not avoid the obligation to provide a

postsecondary education subsidy based upon claims of alienation or

estrangement. The district court incorporated the partial stipulation into

the divorce decree.
                                      4

      The following year after the dissolution, H.M. began her education

at Iowa State.     H.M. contemplates a five-year course of study at Iowa

State in architecture.       Lynn filed an application for a hearing to

determine the postsecondary education subsidy owed by each party.

      At the August 22, 2016 hearing, Lynn offered testimony and

presented exhibits.      Lynn provided an Iowa State financial award

document that shows $20,000 as the estimated cost of attendance for

the 2016–2017 school year. This document projected $8219 in tuition

and fees, $8356 in housing and meals, $995 in books and supplies, and

$2430 in anticipated personal expenses. Lynn also provided a shopping

sheet by Iowa State that shows $19,750 as the estimated cost of

attendance for the same school year.        Lynn also offered a U-bill that

reflects the actual cost of attendance for fall 2016.

      Lynn presented evidence H.M. had joined a sorority for the 2016–

2017 school year. Lynn testified H.M. had been offered a part-time, five-

hours-per-week job at minimum wage.

      Roger also offered testimony and presented exhibits. He testified

he and H.M. are estranged. Roger provided exhibits showing H.M. has

$2119.11 in her bank account and an outstanding loan of about $15,000

on her automobile. From the total cost of attendance, Roger subtracted

scholarships and loans available to H.M., $6000 in H.M.’s potential

income from part-time employment during the school year and summer

employment, $750 in child support, and $2119.11 in H.M.’s bank

account.

      As a result of Roger’s calculations, neither Lynn nor Roger would

be obligated to pay a postsecondary education subsidy for H.M. Roger

testified   the   parental   contribution   should   be   zero   because   his

calculations showed there would be a surplus.             He did not include
                                           5

sorority dues and a cash allowance in his calculations. He believes H.M.

can self-fund her education as he has done toward his own education.

      After posttrial motions urging corrections and expanded rulings,

the court ultimately determined in an amended order that $19,889.20

was the cost of attendance at Iowa State for the 2016–2017 school year.

The court included $1920 in sorority dues to the total cost of attendance.

From $19,889.20, the court subtracted $5520 in scholarships.                  The

court then divided the remaining balance of $14,369.20 1 in half for a

$7184.60 2 contribution from each parent.               Because this amount was

more than one-third of the total cost of attendance, the court reduced the

required contribution of each parent to $6629.73.

      Roger appealed the court’s amended order.                 We transferred the

case to the court of appeals.           The court of appeals affirmed.      Roger

applied for further review, which we granted.

      II. Scope of Review.

      Dissolutions of marriage are tried in equity and appellate review is

de novo. In re Marriage of Vaughan, 812 N.W.2d 688, 692 (Iowa 2012).

On appeal, we give weight to the fact findings of the trial court but are

not bound by them. In re Marriage of Olson, 705 N.W.2d 312, 313 (Iowa

2005).

      III. Discussion.

      A. Process         for     Determining         Postsecondary      Education

Subsidy. Under Iowa Code section 598.21F(1), a court may order

divorced parents to respectively pay “a postsecondary education subsidy

if good cause is shown.”          Iowa Code § 598.21F(1) (2015).        The Code

defines a postsecondary education subsidy as

      1The   court mistakenly stated $14,363.20 in its order.
      2The   court mistakenly stated $7181.60 in its order.
                                     6
      an amount which either of the parties may be required to
      pay under a temporary order or final judgment or decree for
      educational expenses of a child who is between the ages of
      eighteen and twenty-two years if the child is regularly
      attending a course of vocational-technical training either as
      a part of a regular school program or under special
      arrangements adapted to the individual person’s needs; or is,
      in good faith, a full-time student in a college, university, or
      community college; or has been accepted for admission to a
      college, university, or community college and the next
      regular term has not yet begun.

Id. § 598.1(8). H.M. will turn twenty-three in October of 2020.

      In determining good cause, the court must take into account “the

age and ability of the child, the child’s financial resources, whether the

child is self-sustaining, and the financial situation of the parents.” In re

Marriage of Goodman, 690 N.W.2d 279, 282–83 (Iowa 2004); accord Iowa

Code § 598.21(F)(2).   The district court found and we agree that good

cause exists to award a postsecondary education subsidy.

      If good cause is shown, the court engages in a three-step process

to determine the amount owed. First, the court must ascertain “the cost

of postsecondary education based upon the cost of attending an in-state

public institution for a course of instruction leading to an undergraduate

degree and shall include the reasonable costs for only necessary

postsecondary education expenses.” Iowa Code § 598.21F(2)(a).

      Second, the court must ascertain the amount of the child’s

reasonably expected contribution in light of “the child’s financial

resources, including but not limited to the availability of financial aid

whether in the form of scholarships, grants, or student loans, and the

ability of the child to earn income while attending school.”             Id.

§ 598.21F(2)(b).

      Third, the court must subtract the child’s expected contribution

from the total cost of postsecondary education. Id. § 598.21F(2)(c). The
                                      7

court must then allocate the remaining costs between the parents in an

amount not to exceed thirty-three and one-third percent of the total cost

of postsecondary education. Id. This appeal calls us to review the three-

step analysis applied by the district court.

      B. Step One: The Reasonable Costs for Only Necessary

Postsecondary Education Expenses.            The legislature requires us to

determine “the cost of postsecondary education based upon the cost of

attending an in-state public institution for a course of instruction leading

to an undergraduate degree and shall include the reasonable costs for

only necessary postsecondary education expenses.” Id. § 598.21F(2)(a).

This finding is required whether the child is attending an in-state public

institution, an in-state private institution, or an out-of-state institution.

The costs of attending an in-state public institution should be

substantially the same whether the child attends an in-state public

institution, an in-state private institution, or an out-of-state institution.

      In this case, Lynn and Roger are arguing over the specific costs for

H.M. to attend an in-state public institution. We now hold arguing over

the specific costs is unnecessary.          Our federal government has

established programs to make benefits available to eligible students

seeking a postsecondary education.          20 U.S.C. § 1070 (2012).        In

connection with determining what benefits are available to the students,

Congress requires the institutions to determine the cost of attendance for

each institution. See id. § 1087ll. In calculating the cost of attendance

for full-time students, the statute defines the cost of attendance as

             (1) tuition and fees normally assessed a student
      carrying the same academic workload as determined by the
      institution, and including costs for rental or purchase of any
      equipment, materials, or supplies required of all students in
      the same course of study;
                                    8
             (2) an allowance for books, supplies, transportation,
      and miscellaneous personal expenses, including a
      reasonable allowance for the documented rental or purchase
      of a personal computer, for a student attending the
      institution on at least a half-time basis, as determined by the
      institution;

           (3) an allowance (as determined by the institution) for
      room and board costs incurred by the student which—

                    (A) shall be an allowance determined by the
             institution for a student without dependents residing
             at home with parents;

                    (B) for students without dependents residing in
             institutionally owned or operated housing, shall be a
             standard allowance determined by the institution
             based on the amount normally assessed most of its
             residents for room and board;

                   (C) for students who live in housing located on a
             military base or for which a basic allowance is
             provided under section 403(b) of title 37, shall be an
             allowance based on the expenses reasonably incurred
             by such students for board but not for room; and

                  (D) for all other students shall be an allowance
             based on the expenses reasonably incurred by such
             students for room and board[.]

Id. § 1087ll (1)–(3).

      The institutions make the cost of attendance available on their
respective websites for prospective students to see and use when

considering which institution to attend. See, e.g., Office of Student Fin.

Aid, Iowa State Univ., Undergraduate Students: Fall & Spring (2018),

https://www.financialaid.iastate.edu/cost/cost-of-attendance/undergra

duate-students-fall-spring-all-years/ [https://perma.cc/SA5C-W4DX].

      We believe the cost of attendance as published by each institution

pursuant to 20 U.S.C. § 1087ll is presumed to be the reasonable and

necessary cost of attending an in-state public institution for a course of

instruction when a court makes its calculation under Iowa Code section
                                          9

598.21F(2)(a).     If a party can show a special need or some other

circumstances that the presumptive cost is not the reasonable and

necessary cost of attending an in-state public institution for a course of

instruction for that particular student, the court may vary from the

presumptive cost.

       Here, the parties argue over the $1920 cost of sorority dues. The

presumptive cost of attending Iowa State as shown by the record for the

2016–2017 school year is $19,750.                  Housing, meals, and other

educational expenses are included in the presumptive cost. The issue as

we see it is whether the record supports an award of a postsecondary

education subsidy beyond the presumptive cost of attending Iowa State. 3

       We find, there is nothing in the record to establish that H.M.’s

college costs reasonably requires a postsecondary education subsidy in

an amount in excess of the presumptive cost. Accordingly, we decline to

vary from the presumptive cost in making an award under section

598.21F(2)(a).

       In summary, we hold the presumptive cost of attending an in-state

institution under section 598.21F(2)(a) is the cost of attendance as

published by the in-state public institution.              In this case, H.M. is
attending Iowa State.            There has      been no showing of factual

circumstances to increase this amount. Therefore, the reasonable costs

       3Even   though we have held the postsecondary education subsidy constitutional,
its constitutionality has been questioned. See Dan Huitink, Forced Financial Aid: Two
Arguments as to Why Iowa’s Law Authorizing Courts to Order Divorced Parents to Pay
Postsecondary-Education Subsidies Is Unconstitutional, 93 Iowa L. Rev. 1423 (2008); see
also Curtis v. Kline, 666 A.2d 265, 270 (Pa. 1995). But see Johnson v. Louis,
654 N.W.2d 886, 891 (Iowa 2002) (concluding statute did not impermissibly
discriminate against illegitimate children whose parents were never married); In re
Marriage of Vrban, 293 N.W.2d 198, 202 (Iowa 1980) (concluding statute did not violate
equal protection where parents were divorced).
                                          10

for postsecondary education expenses under section 598.21F(2)(a) is

$19,750. 4

       C. Step Two: Calculation of the Daughter’s Contribution. We

now consider step two in the statutory approach, namely, consideration

of the amount H.M. may reasonably contribute to the cost of her

education. Under Iowa Code section 598.21F(2)(b), the district court is to

take into account “the child’s financial resources, including but not

limited to the availability of financial aid whether in the form of

scholarships, grants, or student loans, and the ability of the child to earn

income while attending school.”          The district court included $5520 in

scholarships awarded to H.M. as part of her expected contribution.

       We first note Roger argues there was an additional $500

scholarship not included in the court’s calculation.                  Lynn asserts,

however, there was in fact no additional $500 scholarship.                 The court

found Lynn’s assertion credible. We do not disturb that finding, except

insofar as the court made a minor error in calculating the total

scholarship funds available to H.M. Based on our de novo review of the

record, the available scholarship funds were $5525.

       Roger challenges the court’s calculation of H.M.’s expected

contribution on several grounds.          First, Roger asserts the scholarship

amount should be subtracted from the total reasonable costs for only

necessary postsecondary education expenses as part of step one of the

statutory analysis and should not be considered a contribution by H.M.

under step two. Second, he asserts H.M.’s contribution should include

$5500 in unsubsidized student loans that were available to H.M. but

       4If
         a child is attending an institution other than an in-state public institution,
the court should take the average cost of our in-state public institutions as the
presumptive cost for purposes of section 598.21F(2)(a).
                                    11

which she declined. Third, Roger asserts the court did not include any

financial contribution that H.M. could make toward her education with

money earned from part-time employment during the school year and

from full-time summer employment. Fourth, Roger suggests the $750 in

child support provided to Lynn over the summer months prior to the

2016–2017 school year should be included as a contribution by H.M. to

her education.    Finally, Roger notes H.M.’s $2119.11 bank account

balance should have been considered in calculating H.M.’s financial

contribution to her education.

      On the issue of treatment of the $5525 in scholarships awarded to

H.M., the court properly included scholarships in the calculation of

H.M.’s contribution to her college expenses under step two of the

statutory analysis as provided in Iowa Code section 598.21F(2)(b). The

statute itself explicitly mentions “scholarships” as a source of the child’s

contribution.    Accordingly, the court did not err by attributing the

scholarship funds to H.M. as part of her contribution to her education.

      We next turn to the question of whether available student loans

should have been considered as part of H.M.’s expected contribution.

Roger claims H.M. was offered $5500 in unsubsidized student loans to

defray educational costs, yet H.M. declined them.      Roger argues these

funds were available to H.M., and thus the loans should be included in

the calculation of her expected contribution.

      We do not agree.     Under the statute, the court must determine

amounts that the child may reasonably be expected to contribute to

defray the costs of postsecondary education. In In re Marriage of Neff, we

held that in some circumstances, available loans should be considered in

calculating the child’s contribution to her education.    See 675 N.W.2d
573, 579–80 (Iowa 2004).     We noted it was reasonable to require the
                                       12

children to assume responsibility for repayment of loans because of the

“meager financial situation of the parents.” Id. at 580. The point of Neff

is that while loans may be included in the child’s expected contribution

for postsecondary education, the inclusion of the loans must be

reasonable under all the facts and circumstances of a particular case.

      Here, Lynn and Roger had set aside what around the time of their

partial stipulation amounted to a little over $63,000 in a § 529 account

for H.M.’s education. It makes little sense to require H.M. to accumulate

a substantial debt burden in her college years when her parents had

prudently set aside substantial funds for her postsecondary education in

an amount sufficient to avoid such a result. The very purpose of setting

the money aside in a § 529 account is to lessen the need to accumulate

debt to finance a college education.

      Further, the record indicates that interest on the unsubsidized

loans would commence accruing immediately.          As a result, if H.M.

accepted the loans, by the time she graduates from her five-year program

and has the ability to begin repaying the putative loans, she would have

accumulated five years of accrued interest.     Given the balance in the

§ 529 account and the incomes earned by Lynn and Roger, we decline to

disturb the court’s conclusion that the amount of available unsubsidized

loans should not be included in the child’s expected contribution.

      Roger suggests if there is a surplus in the § 529 funds set aside for

H.M., the funds may be transferred to the § 529 accounts of other

children, thus providing a rationale for limiting the expenditure of funds

in H.M.’s § 529 account. Lynn disagrees and contends that each child’s

§ 529 accounts may only be used for the benefit of that child.         The

dispute is not presently before us. Regardless, there is no evidence of

any kind in the record related to the potential postsecondary educational
                                       13

needs, if any, of the other children. Further, the record shows that since

the divorce, Roger has not made additional contributions to the § 529

accounts of his other children nor has he rebalanced the amounts in the

portion of the three § 529 accounts under his control since the

dissolution.    Under these circumstances, we decline to limit our

consideration of the funds that might be available in H.M.’s § 529

account to provide for the speculative educational needs of her siblings.

       We next turn to the question of whether the district court erred in

not including an amount for income that could be earned by H.M. by

working part-time during the school year and full-time during the

summer.    Lynn testified that H.M. “has a job [during the school year]

pending with the Department of Recreation Services, and they’ve offered

her five hours a week at minimum wage.” Based on this testimony alone,

H.M. should be able to contribute approximately $1000 per year toward

her education. This would not include summer earnings.

       Moreover, the statute speaks about the “ability” of the child to earn

income, not actual work income.        Iowa Code § 598.21F(2)(b).     Student

jobs generally are not planned far in advance and come and go with little

notice. Although the record below is sparse, we can take judicial notice

that the average unemployment rate in the Ames, Iowa Metropolitan

Statistical Area in 2016 was 2.3 percent. See Bureau of Labor Statistics,

U.S.    Dep’t   of   Labor,    Local    Area   Unemployment         Statistics,

https://www.bls.gov/lau/lamtrk16.htm (last visited May 11, 2018)

[https://perma.cc/N3KJ-DRFD]. An expectation that H.M. will be able

to earn income is a realistic one, even on a sparse record.

       In Neff, which involved two college-student children of divorced

parents, we said,
                                     14
       It is not unreasonable to expect both children to work at
       least part-time during the school year and full-time during
       breaks and the summer months. In doing so, both children
       can be expected to earn a substantial amount of money for
       college.
675 N.W.2d at 580. Neff is factually distinguishable because these two

children had a track record of working substantial hours, and their

parents were of limited means. Id. Nonetheless, the case drives home

the point that the student’s anticipated earnings can be based on a

reasonable expectation, as opposed to proof of the existence of a specific
job.

       Roger next suggests the $750 in child support provided to Lynn

over the summer months prior to the 2016–2017 school year should be

included as a contribution by H.M. to her education.         We reject that

approach.   The purpose of the $750 was to provide funds for Lynn to

help pay for the expenses arising from physical custody of H.M. We do

not think it is appropriate to include child support payable to Lynn in

calculating H.M.’s expected contribution to her education.

       Finally, at the time of the hearing, H.M. had a balance in her

checking account of $2119.11. Roger asserts that these funds should be

considered in determining the contribution that H.M. may make toward

her postsecondary education.     We think Roger has a point here.        The

balance in H.M.’s checking account at the time of the hearing was

$2119.11.    The district court did not include any amount from this

savings account in the child’s expected contribution.         The parental

subsidies and scholarships available to H.M., however, will not cover all

the costs of her college education. Factually, she will be ineligible for a

parental subsidy after October of 2020. Although we do not think it is

reasonable to require H.M. to drain all her savings, particularly in light of

her need for regular car loan payments, we think it is reasonable that
                                    15

$500 of her savings should be available to pay for her first year of

education.

      D. Step       Three:      Calculation      of     Each      Parent’s

Contribution. Again, we adopt $19,750 as the reasonable costs for only

necessary postsecondary education for the 2016–2017 school year.

From that amount, we subtract H.M.’s expected contribution which, as a

result of the approach outlined above, increases from $5525 to $7025 as

a result of our inclusion of a contribution of $1500 from H.M.’s work

earnings and savings.

      The amount left after the subtraction of H.M.’s contribution from

the total cost of attendance is $12,725.       Because each spouse has

control over half of the § 529 funds held for the benefit of H.M., we divide

the $12,725 in half to establish a per-parent contribution of $6362.50.

      The maximum amount that each parent can contribute for

postsecondary education is thirty-three and one-third percent, or in

simpler terms one third, of the total cost of postsecondary education.

Iowa Code § 598.21F(2)(c). In other words, the maximum that Lynn and

Roger can each pay is $6583.33.          Accordingly, because Lynn’s and

Roger’s respective contributions do not exceed the maximum allowed in

this case, Lynn and Roger must each contribute $6362.50 toward H.M.’s

postsecondary education.

      IV. Conclusion.

      For the above reasons, we vacate the decision of the court of

appeals and reverse the judgment of the district court.        Each parent

must contribute $6362.50 toward H.M.’s education for the 2016–2017

academic year.    On remand, the district court should enter judgment
                                   16

accordingly.   We exercise our discretion to decline to award attorney’s

fees.

        DECISION OF COURT OF APPEALS VACATED; DISTRICT

COURT JUDGMENT REVERSED AND REMANDED.