In re Larsen

912 N.W.2d 444

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.

No. 16-1794

Supreme Court of Iowa.

Filed May 25, 2018

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.

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.

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.

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 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 $14,369.20¹ in half for a $7184.60² 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

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 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,...