Should student loan payments be a factor in setting child support?

It has always struck me as fundamentally unfair that student loan payments–especially interest on those payments–are not deductible from income for income tax purposes. Borrow $200,000 for business equipment and there’s no argument that the principal and interest on that loan is deductible from income. Borrow $200,000 to obtain a law degree (as many of my younger colleagues have) and it’s “too bad, so sad.” Yet, when it comes to advancing one’s earning capacity, most of the folks intelligent and driven enough to attend law school are much better off investing in their education than in business equipment.

The problem is particularly acute when it comes to student loans and child support. Often, for the purpose of setting child support, a parent has been “imputed” a higher income than they actually earn while attending college or graduate school because they are underemployed. Upon graduation they receive a substantial income boost from obtaining a degree. Yet the court doesn’t take into consideration the years support was set on an inflated “imputed” income and give them some break. Rather, the court will, if asked, immediately set child support on the new, higher, income. Further, a substantial portion of that parent’s new, higher, income will often be used to pay back student loans (often 20% or more of net income).

Due to income tax and withholding, a parent earning $5,000 a month but paying $1,000 a month in student loans has less net income than a parent earning $4,000 a month with no student loans. However the parent making the $5,000 a month with $1,000 a month in student loans will likely pay more child support (or receive less child support) than the parent earning $4,000 a month with no student loans.

Is there a remedy for this obvious injustice? Maybe. S.C. Code of Regulations R. 114-4710(B) begins, “Deviation from the guidelines should be the exception rather than the rule.” However it continues, “When the court deviates, it must make written findings that clearly state the nature and extent of the variation from the guidelines. These Child Support Guidelines do not take into account the economic impact of the following factors which can be possible reasons for deviation.” It then lists three factors that could potentially be“possible reasons for deviation” as it regards student loan debt:

1. Educational expenses for the child(ren) or the spouse (i.e., those incurred for private, parochial, or trade schools, other secondary schools, or post-secondary education where there is tuition or related costs);
3. Consumer debts;
8. Monthly fixed payments imposed by court or operation of law;

I’ve been aware of this issue for well over a decade but never had to actually try it. Further, as this regulation invests a lot of discretion in a family court judge–whether to make student loans “the exception rather than the rule;” whether to grant what is only labeled a “possible reason[] for deviation”– any trial is only going to be the opinion of that one judge. Ultimately an appellate court will need to weigh in on this matter if we are going to have state-wide uniformity.

My opinion is that payments on any student loan debt incurred to obtain a degree that a parent is utilizing in his or her current employment should be deducted from income for the purpose of setting child support. However that is simply my opinion. Until the appellate courts are provided an opportunity to address this issue, there is no clear answer. Some intrepid family law attorney would be doing many of his or her colleagues (and a whole lot of other debt-ridden college graduates) a solid by litigating this issue at trial and, if not prevailing, taking it up on appeal.

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