It is often difficult to determine how debts are divided during a divorce, and this subject can be even more complex when dealing with student loans. While this can be a complex issue, it is not a rare one. In fact, student loans are relatively common in today’s world – especially when you consider the fact that tuition rates seem to be skyrocketing with each passing year. 

Student loans are definitely not insignificant, either. In fact, student loans can represent the highest amount of debt people incur throughout their entire lives. In many cases, students feel that paying off the loan within their lifetime is essentially impossible – especially if they obtained a degree that does not necessarily lead to a high-paying job. And unlike a mortgage, this is not considered “good debt” that allows you to invest and make money. 

Consolidated Loans

Things can become especially complex when student loans are consolidated. Many couples may have decided to do this under various programs set forth by the Department of Education. These programs can be attractive for married couples, but they are not always effective once spouses separate. If one spouse has significantly more student debt than the other, it can lead to serious issues. One spouse might be stuck with a loan that they never took out, and they can be left holding the bill for a degree that will never actually benefit them. 

Things become even more problematic if one spouse refuses to pay off the loan. If payments are not made, interest can easily compound the issue, and a spouse might be left with a bill that is worth over five times the original loan amount. Again, the spouse tasked with paying this loan amount may not have benefitted in any way from the education or the degree. 

Some US lawmakers have been trying to address this issue with various bills. Particularly concerning is the fact that some spouses are being forced to pay student loan debt racked up by abusive and violent former partners. As one lawmaker put it, “That’s just wrong.”

How Was the Money Used?

When dividing student debt, courts may take a number of factors into account. First of all, they may look at how the money was actually used. Student debt can be used not only for books, tuition, and school fees, but it might also be used for living expenses. If both spouses were living together when this money was being spent, it can affect how the debt is divided. For example, one spouse might have used their student loan money to pay the rent on a home that the other spouse lived in. Therefore, both spouses benefitted somewhat from the loan – even though only one spouse actually received the loan. 

Marital and Separate Property

At the end of the day, it goes back to the simple concept of separate vs. marital property. If a student took out a loan prior to signing the marriage contract, there is a much higher chance that they alone will be “on the hook” for that amount. In contrast, loans taken out during the marriage are more likely to be shared by both spouses. The exact handling of student loans also depends on whether states follow “equitable distribution” or “community property” rules.