Financial dilemma: What would you do?

Here’s the real life scenario someone I know is facing:

Background: A young woman I know, Joan, is in her late 20s. She married several years ago and just had their first child. They both work FT and have supported themselves since they got married, including paying for post-grad education. Her husband earned his Master’s degree a year ago, and Joan will finish up her degree in the fall. They’re working tirelessly to save up enough for their first home and both drive cars that are 10+ years old.

A decade ago, as part of their very acrimonious divorce, Joan’s parents agreed to split the cost of her undergrad degree 50% each. Both parents are professionals working for the same company known for its great benefits (and retirement plan), but she makes twice what he makes.

While the mother paid off her half of the tuition as it accrued courtesy of her well-to-do parents, the father had to take out loans and is still paying on them to this day. There’s about $30k left, and we know this because he brings it up to them, and me, often. He also made some bad financial decisions, including the option to buy her out of the marital home, right before the housing crisis. He also lost about $30k on that deal, too.

Note that Joan could have gotten a full ride to her local college, but chose another college in large part due to the parent’s very bitter divorce, which included cheating on the mother’s part. So, to put it mildly, the father is bitter about a lot of things.

In any event, last year Joan’s mother’s great Aunt died childless, and left a sizeable inheritance to Joan’s mother, half of which she is gifting to Joan in annual installments of $30k. Joan is due to receive her first installment in a few months.

While he is well aware that Joan will inherit 1/8 of a fortune following the death of her 80ish grandparents, Joan’s father knows nothing of this unexpected windfall.

So, here’s the dilemma: Is Joan under any moral obligation to pay off her father’s portion of the education loan that he is still paying, on her behalf? Like I said, they both need new cars, need to save for a DP on a home, and just gave birth to their first child. So some big expenditures are on their horizon.

So if I am following this correctly, Joan will be gifted $30k per year? For how many years is this expected to go on?

Obligation, no.
But it would be incredibly selfish not to offer.

No, she is not. He agreed to pay, and he’s the one that (according to the post) made bad financial decisions. And her mother cheating is completely irrelevant in all ways - has nothing to do with the father and daughter and their relationship and bills.

I do not agree that she is necessarily incredibly selfish not to offer to pay off debt he agreed to incur, even if he did so for her sake (and was it of his own generosity or part of a divorce agreement). A lot depends on her relationship with her father and how he’s treated her since the divorce. With all the bitterness mentioned - if he’s treated her poorly and only paid what obligated to by settlement, I don’t think she’s obligated to cover for that. If he’s treated her well or covered out the kindness of his heart (rather than defined agreement per divorce, which admittedly seems odd to me for that to go past child’s 18th birthday, but I don’t know much about divorces), then she should offer to at pay.

If she doesn’t immediately call her dad up and say, “y’know that tuition you owe, never mind I’ve got it myself, thanks for your contributions thus far. Love you, Dad” she is a terrible human being.

She could offer to pay half of the balance or half of dad’s monthly payments.

Joan’s father is under no legal obligation to pay for her college. He agreed to out of the goodness of his heart, and has continued to do it, even when it meant he had to take out loans himself. And the “bad financial decision” of buying out his ex was certainly bad in hindsight, but it was a reasonable choice during an acrimonious divorce. It’s not like he gambled it away.

So I think offering to pay off his loans is definitely the right thing to do. Doing it over the course of 2 or 3 years will still leave Joan with a lot of extra cash that she wasn’t planning on having before her great aunt died.

And if Joan truly chose a more expensive college in part to punish her parents for their divorce, then while somewhat understandable, it still means she has some karma points to make up.

Yeah, is this the correct interpretation? If it is…a baby is a big expense, but it’s not a 30k a year expense. She should definitely offer to pay off the student loans. In her position I can barely imagine the level of guilt that I’d feel if I didn’t.

Joan should take over the loan from her dad. That would allow Joan to have $30k/year and just make the regular payments on the loan. What is that going to be anyway–around $3-400/mo? Joan gets to have a lot in savings and she can decide how quickly she wants to pay the loan off.

Joan should not pay off the loan in one big chunk. Joan likely has little savings and lots of expenses coming up. She should use this windfall to help cover those expenses. As those expenses taper off, she can think about paying off the loan in bigger chunks.

I think your signature is appropriate for your question. Joan knows the answer to her question. It stares at her from the mirror every morning.


If I read the OP correctly, the parents were required by the divorce decree to each pay half of the daughter’s college loans. So he didn’t do this out of the goodness of his heart and he was legally required to pay for them.

But I agree that if Joan is coming into a fairly substantial windfall it would be good for her to pay off all or part of her father’s debt at this point. It doesn’t have to be a blanket payment, but perhaps she can pay a portion of his loan payments. Unless she feels that he should suffer for some reason, but absent that she would be doing a good deed and easing his burden.

If I were in Joan’s situation, I’d find room in my budget to pay off the student loan debt her father incurred helping her out.

The father and mother agreed to pay for Joan’s education.

Joan’s mother met that agreement.

Joan’s father met that agreement.

The HOW is not Joan’s responsibility. She’s their child, and its an agreement between the parents. If the father could not meet the responsibility, he shouldn’t have made the agreement.

If, however, Joan wants to shut her father the hell up about it, then I think paying the money will be a great thing.

Yeah, you might be right. If it was only an agreement between the parents, then there’s no legal obligation for him to pay once she became an adult. But if it was actually part of the divorce decree, then there would be a legal obligation.

I still think choosing to go to an expensive college because she was pissed at her parents was kind of a shitty thing to do, so it doesn’t change my opinion that the right thing for her to do now is pay off the remainder.

It would certainly be generous and praiseworthy for her to take up the burden. It is not, however, in any way required, legally, morally, or ethically.

I had the sense that Joan’s choice of college was based more in a desire to put a few hundred miles of distance between herself and the divorce drama than anything else.

Had the windfall from her mother not taken place, I wonder what kind of time frame Joan (and Mr. Joan) were looking at before they felt they had sufficient for a down payment. And what’s their target sum. And at what rate the dad is paying off the $30K. And if mom finding out about Joan helping dad would likely cause her to abandon the annual gifts.

FYI, She’ll be receiving $30k per year for about 12 years assuming that they accept it. They declined the money when it was first brought up, because they are very proud, but the mother has insisted that she’s going to send it to them anyway. I think it may be her way of trying to make up for all the chaos she’s caused with the divorce. She loves her daughter but isn’t very touchy feely.

Joan’s father and she are much closer. He is much more involved in her life, sometimes too involved. The only issues that they’ve had were when he attacks her mother, and over money. Besides constantly bringing up the loan and house debts, 5 years ago Joan’s father helped himself to $500 of their money without asking or even telling them. They found out when they got the bank statement. (Joan’s father opened up a joint checking account when Joan was a minor and Joan had never taken him off the account,).

His rationale was that he’d flown home in the middle of a year working abroad to attend their wedding and felt that since they got several thousand dollars in gifts, and because he was broke from paying off her college loans, that they would have no objection to helping fly him home.

He eventually paid the money back but it definitely strained their relationship. And Joan’s husband is not his biggest fan any more, both because of the loan and because he paid nothing toward the wedding.

FTR I think that they should accept the gift and then OFFER to assume the loan, since it was for Joan’s benefit. My husband believes that they should accept the money and sock it away for their future and not tell her dad anything.

Joan left the city to put distance between them, not to punish anyone. The father was very, very unhappy about the cheating and divorce and would pepper Joan with questions about her mother and boyfriend every time Joan visited her. He’s also made her feel badly by telling everone who will listen that the only reason he remained in their lousy marriage was to protect Joan from her mom. And that he opted to keep the house because Joan grew up there, and he wanted to provide her with stability, even though he couldn’t afford it.

And recently he’s even alleged that her mom was physically abusive to her when she was little, something that Joan vehemently denies it. So a lot of angst here.

PS. They were both legally obligated to pay for 50% of college expenses via divorce decree. It’s not an uncommon thing to stipulate in divorces these days. Mother was obligated to pay her half of college plus pay for Joan’s medical insurance until she turned 26.

I think they should save the money for their own kid’s education. That obligation goes forward, not back. What’s next? The car he bought her in high school? The food she ate?

If she wants to give her dad some money, go for it, but don’t make it about “paying back the loan” . He’s clearly a mess with money and gets it all tangled with all kinds of other things.

Dumb question . . . Is money all really goong to Joan, or is it split between Joan, husband, maybe kid, for tax purposes? If it is, then really, Joan shouldn’t be giving money given to her husband/kid. Hubby doesn’t sound like he’d be for it, and if it’s coming to him, he gets a say. Also, imho, if $10k is in the kid’s name, that should go to the kid (savings, obviously, not legos)