A few months ago we blogged about recent public school rankings across Pennsylvania and the battles they sometimes foster over school placement among warring parents. Well, Niche.com has now weighed in on Pennsylvania’s top private schools. The list is 100. We’ll pause at 25 with Aquinas School.

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Last week Newsweek published its annual rankings of America’s Top High Schools.  This is a much awaited publication for those with children of that age and it is undoubtedly well circulated in the admissions offices of our colleges and universities.

These compilations also commonly hit the family lawyer’s desk whenever there is a hot dispute over primary custody or relocation. In reading the recent history of relocation cases, the decided focus of Superior Court cases is on the matter of how the relocation benefits the child and in many instances we are given these rating compilations by custody litigants who want to show that a new school would be “better” for the child or the present placement is “fine.”

Many judges and hearing officers deciding these cases will admit these magazines “for what their worth.” Technically, there are myriad evidentiary problems with any “ranking.”  The content of the magazine is itself hearsay.  The person making the statement that “Quaker Valley is the 271st best high school in the nation.” is not a named person at all.  It is a magazine.  So we don’t know the identity of the person who decided that Quaker Valley was No. 271 while Penncrest was No. 276.  We also don’t know the specifics of how this was decided.  The article will tell you about general parameters employed such as college matriculation and graduation rates and average SAT scores.  But the typical editors who do the ranking don’t tell us how these metrics are weighted or whether a planetarium is a plus while a ceramics kiln is neutral.  Lawyers who stand up and object to the admission of these rankings have excellent reasons why the objection should be sustained and most law school professors would harshly grade any student of Evidence who would admit “speculative hearsay compiled without ascertainable scientific foundation.”  Of course you could subpoena the editors of Newsweek to explain all of this but, alas, they rarely come to court.

What really happens? Most judges this author has seen will admit the document over objection noting that the actual “value” of this as evidence is not easily ascertained.  I suspect they then lug the magazine back into chambers and scan it first to see whether their high school got in.  Then they will glance at the schools the litigants want to compare and spend a couple of minutes seeing what data there is that they can assess (e.g., grad rates and SAT scores).  Because, even they realize that Newsweek and other magazines of its ilk don’t really spend the other 51 weeks of the year studying America’s 18,000+ high schools. Americans love rankings of all stripes and a magazine’s job is to amuse its audience.

The other thing that happens in chambers after the dust of a school enrollment fight settles is lamentation. I suspect that what most judges would privately tell the litigants is that if they truly wanted a positive outcome, the best thing two parents could do would be to agree on a school placement and support the child together in that placement.  For most children a custody war is a diversion from life and education over which they have no control.  In many instances it is clear that No. 36 ranked Conestoga High School is a superior school to No. 168 Fox Chapel.  But outstanding kids from Fox Chapel go to Harvard too and in the vast majority of custody disputes, Harvard is not really on the horizon.  There are always special cases where a child has really unique gifts (not as much as their parents think) or special educational challenges where a special educational “fit” is called for.  But, most judges grade on the “curve.”  They are not trying to raise young venture capitalists or nuclear physicists.  They want children who will not commit crimes and pay taxes when they grow up.  Judges get to see plenty of adults who are very bright but never mastered the “no crimes” or “pay taxes” thresholds of adult life.  So often they are put off by parents who think that a child custody trial is a sound means of securing maximum educational achievement.  Parents are often disappointed to discover that “The judge doesn’t seem to care.”  Ironically, judges do care, but from their elevated view on the bench they often see quite clearly that moving a child from No. 284 Haverford High to No. 126 Kiski will not vastly improves the chances for post grad studies in math at Stanford.

The ratings wars will go on because we love quick answers to complex questions. And if you have a custody case where you want to enroll Eloise in No. 113 Upper St. Clair while the useless father wants to keep her at a school that doesn’t even have a ranking, be certain to get the August 11 edition of Newsweek and bring it to Court so the judge can see that you are a concerned parent.  But don’t bet the down payment on a house in western Pennsylvania on the belief that the magazine is your ticket to a new life in a new town.  It’s not how the cookie crumbles.

Today began with a meeting with co-counsel and clients to follow through on matters we had resolved by agreement reached earlier in the summer.  The parties have two children, one of whom is heading into the age of college search.  Our agreements contain some reasonably clear provisions about continuous enrollment, consultation with parents and suitable grade point average.  But today’s subject ventured into the field of funding for college.

The landscape of college planning has become very foggy in recent years.  The conventional wisdom was to start early and make regular contributions to Uniform Minor accounts or to 529 Plans.  The more you saved, the less traumatic the college shopping process would be.

That was then.  This is now.  In today’s discussion when one of the parents mentioned putting money aside for the soon to arrive day of matriculation, I casually noted that having lots of money saved for college might make the applicant a very solid candidate for admission but a very weak one when it came time to discuss what has become known as the “package.”   The package is not something delivered to your door but the array of loans, grants and subsidies for which the admitted student can be eligible.

As I returned from my meeting, I picked up the Wealth Management supplement to the September 22 Wall Street Journal and read an article by news editor Charlie Wells titled “Mistake Parents Make With College Aid.”  If there was a positive note to the article I somehow missed it.  The article begins with the story of a middle aged single mother who looked at her own financial situation and estimated that her son would be eligible for a reasonably substantial “package” at nearby Farleigh Dickinson University in New Jersey.  The mother had the good fortune to remarry a few years ago but did not consider when doing so that her new husband’s financial condition was going to be counted in deciding whether her son (his stepson) would qualify for aid.  As it turns out son finished college but with a huge student debt that probably could have been mitigated had Mother opted to merely live with, rather than marry, Husband #2.

The article then described college aid red flags.  Some are easy.  If your little student inherits from Aunt Tilly in DesMoines while attending college, his inheritance will count against him in terms of eligibility. But suppose a parent gets a great offer on his/her house at the shore and decides to sell, triggering a large capital gain.  Or worse; suppose Father is downsized by his Fortune 500 employer so that he gets a large severance and sees all of his benefits paid out.  Yes, that was a handsome tax return he filed but he’s now 52 and has few prospects for any other comparable employer to pick him up.  A year earlier his daughter might have qualified for a package.  But the sudden and unforeseen distribution of accumulated severance and benefits means too much income is showing for daughter to be an eligible receiver.

Money from grandparents, putting funds in a student’s name, remarriage or even purchase of a pricey car or home can all trigger review and withdrawal of various forms of student aid.  It seems good fortune can cripple you (e.g., inheritance) or bad fortune (e.g, loss of job with severance) could do the same.  So can one really “plan” for college?  Of course the answer is yes but today one must be prepared for a good plan to be spoiled by “events”.

The article suggests that financial aid decisions can be appealed to the conferring institution.  But one does have to wonder how badly a $60,000 a year college financial aid evaluator will feel about cutting aid to a student whose Mother was just cut from a $170,000 a year job with a $400,000 package of severance and benefits.  But if you are among those who is not feeling badly for daughter, the same Journal section features a graph showing that a four year private college now averages just under $45,000 a year.  This means “all in” costs of a private college education are $180,000 after tax dollars. Assuming a marginal income tax rate of 30%, parents have the need to earn $260,000 to pay that $180,000 education bill.  If we take the $400,000 pre-tax severance package and reduce it by 35% because that’s where the new rates take us, $400,000 pre-tax feels more like $260,000 after tax.  So the severed employee can look at his “package” and say “Well, I got my kid’s school paid for and an additional $80,000. That’s roughly six months of income. “

 

A decade ago, a debt crisis was looming; erected upon the twin foundations of mortgage and consumer debt.  The downturn of 2008-2009 shifted that as lenders realized that much of the debt they had issued could not or would not be repaid.  While the availability of credit has been more limited in recent years in the consumer and commercial markets, lenders have shifted to student loans as a substitute. The difficulty here is that these loans are based on little more than assumed levels of post-graduation earnings.  As we have seen, the job market for college graduates is not what it once was and herein lays a problem that is affecting the divorce process.

For lenders, student debt enjoys a special safe harbor in that student loans are ordinarily not dischargeable in bankruptcy.  But lenders recognized that the advantage of non-dischargeability came with the risk that the students simply “walked” on the debt; paying nothing.  So lenders began to press for parents of students to “co-sign” the student debt.  And co-sign they did taking student debt owed by adults ages 60 and older from $15 billion in 2007 to $43 billion in 2012.  It is self-evident that adults 60 and up are not typically students of any kind and that those who are pay for education out of current income or savings.

We all understand that parents and grandparents want their children to succeed and for most of American history, investments in post-secondary education have yielded excellent returns financially.  But today, labor markets are not absorbing college graduates in the same way they did 20-30 years ago.  According to U.S. News & World Report over the past decade college tuition has risen a stunning 79%, almost double the rise in health care costs.  But a recent study from the San Francisco Federal Reserve Bank indicates that from 2006-2013 wages for recent college graduates grew by only 6%.

Parents faced with the dilemma of either guaranteeing student debt or seeing their children drop out are stepping up, but they do so at considerable risk.  If the child cannot pay his own student debt, the guarantor parent will have to.  And what parents don’t seem to consider is the fact that as they age, their life in the workforce is coming to its end.  The response of many is that they expect to keep on working far beyond what used to be called normal retirement at 65.  But while those who are self-employed may have that option, many older workers are finding that they are targeted when businesses elect to reduce their labor forces.  Parents also tend to assume, they will always be able to work.  But that assumption ignores the fact that as we age, we become less healthy.

These financial commitments to help children are causing a rippling effect in the domestic relations field.  An intact couple with roughly $80,000 in earnings can often absorb several hundred dollars a month in guaranteed student debt.  But once that intact couple separates and now resides in two households, the student debt service becomes unsustainable.

We have come to see post-secondary education and training as a kind of birth right.  Today, like any other form of investment, education costs should be viewed in the same light as the prospectus of any financial instrument.  “Past Performance is not necessarily indicative of future results.”  This is true enough for the student but potentially disastrous for the parent with assets who signs the guarantee for a $50,000 obligation when, at age 50, his expected life in the work force is already 2/3 behind him.

In the process of handling a divorce where minor children are involved it is not uncommon for the parties to at least broach the subject of contributions to an undergraduate degree or vocational training for a child following high school.  This was once a pretty easy subject as Pennsylvania required separated parents to contribute to this form of enterprise from 1963 to 1992.  But that abruptly ended when the Supreme Court of Pennsylvania found that lower courts had imposed this duty without the imprimatur of legislative approval.  With the 1992 ruling in Blue v. Blue, 616 A.2d 628 college was only going to be ordered where the parties agreed.

The other driving force that had affected this area is the spiraling cost of college.  This author graduated from George Washington University in 1977 at a time when a year of college was a $5,000 experience.  Today, that same experience at the same university is 10x more expensive.  And while recent alumni have been quick to remind me that the school has improved vastly in the thirty years since I was emitted, I feel safe in my retort that it certainly is not 10x better. Even when adjusted for the Consumer Price Index, the $5,000 of circa 1977 should today be just under $18,000 in 2010 dollars.

So, we live in an age when a commitment to send a child to college can easily be a $200,000 obligation.  That will require roughly $300,000 pre-tax dollars, a fairly staggering sum for even affluent parents who are living together.  It becomes all the more dicey when net worth and income have been subject to proceedings to dissolve a marriage.  This means that agreements relating to support a college kind of experience need to be carefully considered and drafted if the commitment is to be something more than “We’ll do what we can.”

The easiest approach is to start the savings process early.  Uniform Transfer to Minors Accounts is one device. 529 Accounts are a second.  They come with different characteristics relating to accessibility but the key point is that the more you save now, the more will be available when college time comes.

But, what about limits on the contributions.  There is a big difference between a college education and a child’s dream college experience. We recently litigated a case where a child with a C+ average and board scores in the 1000 range wanted her parents to underwrite a $45,000 per annum private college experience. Is that a reasonable expectation? One parent said yes and the other no.  The agreement was silent except for a consultation clause related to college selection.  There is a tendency on the part of parents to be lenient when they execute these agreements because they feel guilty that they have “ruined” their child’s adolescence by splitting up. Kids are certainly affected by divorce but does an expensive college somehow make up for an experience, like divorce that is ubiquitous. Does the child of divorce get a BMW as his first car if mom and dad are separated, but a Focus if they stay together.  Economic decisions need to stand on their own and not be driven by guilt.  They also need to have some fail safe provisions.  We are seeing many folks who were earning hefty incomes and could easily have once afforded almost any college costs caught in the crossfire of a bad economy that this time has afflicted the management class almost as harshly as the working poor. Unemployment benefits of $400 a week leave little room for contributions to college.

Then there is the role of the child.  What are to be his or her responsibilities?  Today a child with mediocre grades and boards can still pull a quality college admission if he or she is willing to pay full freight. Does that mean the parent must commit as well? And if so, for how long?  Today only 30% of liberal arts majors complete their degree in four years. Is there a minimum grade point average that must be maintained or will the standard be how low can you go? Bear in mind that without a waiver of the student’s rights under a law called the Federal Educational Rights and Privacy Act, a parent has no right to a student’s grades or to know whether the student missed class because he was at the university hospital’s detox unit.

The issue of timing payment is also a minefield.  We have many agreements in our files that say each parent will pay a percentage of tuition or other costs.  But, we are seeing that many parents don’t reveal their incapacity to pay until the arrival of the college invoice. In once recent instance, we had a parent decide that the best way to save for college was to roll the child’s tuition savings plan into a lovely beach house.  That was four years ago when shore property was hot.  Chances are that child is not going to college until the market absorbs the huge inventory of unsold property that has been accumulating since 2007.

We conclude that college is a good thing and sensible provisions for it are as well.  But the price of education has escalated to a point where college or any other post secondary education needs to be carefully planned for if the investment is to be achievable and productive.

Please take a look at a recent blog entry written by Robert Epstein, a family law attorney in Fox Rothschild’s Roseland, New Jersey office. Robert wrote about the role of religion in divorce and custody cases and gives some insight into how religious decisions are made in New Jersey custody cases.

Recently, a colleague in my office had the experience of litigating a religious issue in a Pennsylvania custody case. The mother had made all the arrangements pertaining to the child’s first communion, but the father objected, wanting instead to bring the child up in a different religious tradition.

 

Unlike New Jersey, Pennsylvania does not have a definable way to determine who has the ability to educate or bring up the child in their particular religious traditions, instead, religious upbringing is a “legal custody” decision which usually requires both parties to agree to a particular decision (also under this analysis – school and educational decisions, medical decisions).

 

Anecdotally, we anticipate judges choosing to not interfere with these issues – unless the child’s health and safety are at risk, they will not intervene and decide what religious tradition the child should be raised in or whether the child should be barred from participating in a religious ceremony. In fact, the standard is that the ceremony will proceed unless the objecting party can show that the child will experience substantial harm, physically or mentally, at any time now or in the future.

 

Ultimately, my colleague’s case turned on the mother’s apparent deceit in how she registered the child for Sunday School, nevertheless, had the judge reached the merits of the issue, there were few facts available to the father to prevent the child’s first communion from proceeding.