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Student loan debt and divorce: Who pays?

On Behalf of | Dec 31, 2021 | Family Law |

To say that divorce brings up a lot of issues is an understatement. While you may anticipate many of them — such as property division and custody allocations — several others may surprise you. One such issue that many people fail to consider is the allocation of student debt.

If you are like many future divorcees, you may assume that student debt belongs to the person whose name it is in, or to the individual who makes the payments. This is not necessarily the case, especially if you or your spouse acquired the debt during your marriage. If this is the situation, the division of debt becomes trickier, and who becomes responsible for the repayment of the loans boils down to several factors, many of which are situational. While the only way to determine for certain who will assume responsibility for student loans post-divorce is to bring your case to the courts, Student Loan Hero encourages you to ask yourself three questions, the answers to which can guide you toward a fair outcome.

Did the borrower earn a degree during the marriage?

Many states are of the stance that a college degree is a marital property, as a degree substantially increases a person’s lifetime earning capacity. If you or your spouse earned a degree during the marriage, and if either of you borrowed money to make such a feat possible, the courts will likely consider the degree, and the associated student debt, marital property. This type of determination would make both you and your spouse responsible for the debt.

How did you use the student loans?

Though in most cases the majority of funds from student loans go toward school fees, tuition, books and other educational expenses, it is not uncommon for borrowers to use funds to pay for living expenses. If you or your partner used your student loans to pay for housing expenses and other family-related costs, the courts may consider all or part of the debt marital property, in which case, they would allocate repayment by equitable distribution laws.

What is each spouse’s earning capacity?

If the courts determine that student loan debt is marital property, they may then consider each spouse’s ability to repay it. If one spouse has little to no income, the courts may assign the debt to the breadwinning spouse — even if the said spouse did not incur the debt him or herself. However, if both you and your spouse make an equal amount of money, the courts may consider it fair to split the burden equally.

These are just a few factors the courts will consider when allocating debt in divorce. An attorney can give you a better idea, though, of what to expect given your unique circumstances.