How Student Loans are Impacted By Divorce

During divorce, you must split your assets as well as your debts. While we’ve covered various ways to divide debts, students loans can be particularly frustrating for couples. Must both of you pay for one person’s student loans?

According to an article in the Wall Street Journal, the average debt in 2012 for a student with a bachelor’s degree was more than $29,000. Here are some ways in which student loans are affected during divorce and ways you can make the process a bit easier:

• Like other debts, the way in which student loans are split up is determined by the type of state you live in; there are community property states and equitable distribution states. In a community property state, all assets and marital property is split 50-50, though rules sometimes differ for student loans. In an equitable distribution state, property and assets are split up according to many different variables, and who the court believes has a fair and equitable claim to that piece of property. North Carolina is an equitable distribution state.

• If the student loan debt was obtained before marriage, it is considered separate property and will continue to be after divorce. That means you will be on the hook for your debt and your spouse will have to pay his. Things get more complicated if the student loan debt was obtained during marriage. If one spouse has significantly more student loan debt than the other, the couple and the court will have to come to agreement on how this debt will be divided (unless you have a prenuptial agreement). If the spouse that has a lower income is forced to pay the student debt, there may be temporary spousal support required from the other spouse.

• You may have the opportunity to be reimbursed for an ex-spouse’s student loan debt. This requires documentation before the divorce is finalized that states how much the other spouse owes you and the timeline in which this needs to be paid back.

Come join us at our monthly divorce workshop, where you can speak with volunteer professionals about your financial questions.