What happens to student loans in a divorce?
In today’s society, many careers require an advanced or higher level of education such as a college degree from a university. Individuals with a college degree tend to earn more money than those with only a high school education. Post-secondary education is costly. When an individual cannot pay for their post-secondary education they take out a loan that helps individuals pay for their tuition, books, and living expenses. After an individual has graduated, they will have to repay their loan. According to statistics, paying off student loans usually takes at least 10-20 years. This causes individuals to wonder what happens to their student loans in a divorce as the division of property can be extremely intricate during the divorce process. Please read on and contact a qualified Nassau County Division of Assets Attorney who can help you understand how student loans are handled during the divorce process.
How are student loans handled in a divorce?
It is imperative for those seeking a divorce to understand that any student loan debt they accumulated before the marriage took place will remain solely their responsibility after a divorce. This is because assets and debt are either regarded as marital property or separate property during the division of assets. Essentially, marital property refers to any assets or debt that have been acquired during the marriage. Separate property refers to any assets or debts that a spouse has accumulated before or after the marriage. During the division of assets, only marital property is up for division. With that being said, if the student loan debt was incurred during the marriage it is deemed as marital debt. This means both parties are responsible for paying a portion of the debt as it is considered marital property. Additionally, if a spouse co-signed the student loan, they will remain responsible for the debt even though the marriage is over. Spouses that co-sign a student loan for their partner are legally obligated to repay the debt. This is because if the primary borrower is unable to make payments, they become liable.
Furthermore, what happens to student loan debt in a divorce also depends on whether the state is a community property or an equitable distribution state. Regardless, every situation is unique. Some states consider student loans separate property. In a community property state, everything is divided equally. This means student loan debt is considered community property and is therefore both parties’ responsibility. However, this is only the case if the student loan debt was accumulated during the marriage. Moreover, equitable distribution states divide marital property fairly, but not necessarily in an equal 50/50 split. Equitable distribution states have the courts decide how to divide student loan debt if the couple cannot come to a mutual agreement. The court considers several factors such as each party’s contributions to marital property and economic circumstances to determine a fair split of student loan debt. Nevertheless, this only applies to student loan debt that was incurred during the marriage. Additionally, the same rule applies to refinancing a student loan. Ultimately, if student loan debt was accumulated before marriage, they are solely responsible for repaying it.
If you are seeking a divorce, please don’t hesitate to contact our dedicated and trusted attorneys who can help you understand the complex process of the division of assets during your divorce. Allow our firm to help you today!