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Iowa Code section 598.21F, the Post-Secondary Education Subsidy Statute, allows a court in Iowa to order a postsecondary education subsidy also known as a PSES. A postsecondary education subsidy is an order by the court which requires either parent of a divorced child to pay a portion of the child’s college expenses if the child qualifies and certain financial requirements are met.
First, it is essential to note that this statute only applies to children of parents who are divorced. It does not provide a possibility of a subsidy for children of parents who are still married or never were married.
Second, it only applies to parents who were divorced in Iowa under Iowa Code chapter 598. So if a couple divorced in another state, the parent or child cannot seek PSES in Iowa later.
If the child is of divorced parents in Iowa and the divorce decree does not already mandate payment of college expenses to either or both parents, then the next step of the Court is to determine whether the child is eligible for the subsidy.
To determine whether the child is eligible, “the child must be between the ages of 18 and 22 and must have a demonstrated capacity to succeed in postsecondary education.” In re Marriage of Vaughan, 812 N.W.2d 688, 693 (Iowa 2012). (emphasis added). Many cases have found that either showing the child’s good grades in high school or admission itself into college is sufficient to show a demonstrated capacity to succeed in postsecondary education. In addition, students qualify so long as they are older than seventeen but less than twenty-three.
Next, the Court “may” order a postsecondary education subsidy if “good cause” is shown. Factors that the Court considers include “the age of the child, the ability of the child relative to postsecondary education, the child's financial resources, whether the child is self-sustaining, and the financial condition of each parent.” Iowa Code § 598.21 F(2). The Court engages in a financial balancing test to determine the amount of costs not covered by the child’s loans, scholarships, and other means such as employment of child and how much of those employment earnings could properly go toward education
Upon a showing of good cause, the Code provides a process for determining the amount of subsidy.
First, the court determines the cost of postsecondary education based upon the estimated college expenses provided at one of Iowa’s three public institutions, either the University of Iowa, Iowa State University, or the University of Northern Iowa. The cost of postsecondary education includes tuition, fees, textbooks, and housing.
Next, the court is to determine the amount, if any, the child may reasonably be expected to contribute, considering the child's financial resources, the availability of financial aid such as scholarships, grants, or student loans, and the ability of the child to earn income while attending school.
Third, the court is to deduct the child's expected contribution from the cost of postsecondary education to arrive at a figure for the “remaining cost” of the postsecondary education. § 598.21F(c).
Once the remaining cost has been determined, the court divides the responsibility of the remaining cost to each parent. The statute, however, explicitly caps the amount each parent is to pay to no more than 33 1/3 % of the total cost of the child's postsecondary education at a state institution. Even when the parents have few resources, a “modest” educational subsidy may be appropriate, but must not cause undue financial hardship. Vaughan, 812 N.W.2d at 695 (citing In re Marriage of Neff, 675 N.W.2d 573, 579 (Iowa 2004)) (subsidy as low as $25 per month appropriate if the parent has modest income).
It is entirely possible that a Court could find no subsidy is necessary based upon the financial resources, including scholarships and financial aid available to the child. Where the child's expected contribution exceeds the total cost of attending an in-state university, then no subsidy can be ordered.
It is also important to point out that not all costs associated with college are included or should be included in a child’s total cost of education. Some costs of college items are at least debatable, such as football tickets, fraternity costs or fraternity merchandise purchases, cell phone charges, car tax, insurance, license and repair fees, and income tax filing expenses.
Iowa Code section 598.21 F(4) provides “[a] postsecondary education subsidy shall not be awarded if the child has repudiated the parent by publicly disowning the parent, refusing to acknowledge the parent, or by acting in a similar manner.”
There are also obligations of any child who is awarded a post-secondary education subsidy by the court. The statute requires that the child forward each parent reports of grades awarded at the completion of each academic session within ten days of receipt of the reports.
Unless otherwise specified by the parties, a postsecondary education subsidy awarded by the court shall be terminated upon the child’s completion of the first calendar year of course instruction if the child fails to maintain a cumulative grade point average in the median range or above during that first calendar year.
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