Student Loans in Divorce: What to know

Many divorces deal with questions about student loan debt. This article serves to answer some of the most common questions concerning how student loan debt is divided in a divorce.

California’s Community Property Laws

Essentially, Debts and assets acquired during the course of the marriage are subject to equal division, and debts or assets acquired before the marriage took place are generally considered to be separate property and not subject to division. There are exceptions to these general rules, of course, if a valid pre-nuptial agreement or post-nuptial agreement is part of your marriage contract.

HOWEVER – student loan debt is not treated the same as other types of debt in the course of a divorce.

Assigning Student Loan Debt

California Family Code Section 2641 lays out that the courts consider student loan debt as something that benefits the individual who took out the loan. This is because that person’s education will, presumably, continue to benefit them even after the divorce. Because the divorced ex-spouse will not retain the benefit of that debt, the courts have ruled that the divorcing spouse should not have to continue to pay for the educational debt. This pertains to student loan debts that were acquired either before the marriage or during the course of the marriage. This means that if your student loan was taken out in your name for your education then you should expect the court to assign you sole responsibility for repaying that debt.

Exceptions

However, as in most things in life, there are exceptions to the general rule. The courts have found it appropriate and proper to divide student loan debt between two divorcing spouses if:

• Both of the spouses retained a benefit from the training, education, or student loan at issue.
• The loan, training, or education taken by one spouse actually offset the education or other training that their spouse received. This means that it contributed to the community as a whole and did not solely work to the benefit of the one individual.
• The education that the student loan allowed one spouse to receive reduces that spouse’s need for spousal support. If a student loan allowed the spouse to retain a higher level of education, a more lucrative job, and diminished the need for the other spouse to pay spousal support, the courts could assign the spouse whose obligations in spousal support have been eased to bear some responsibility to pay back the loan.

Unfortunately, there are no hard and fast rules about these factors that can help you know for sure how a judge will weigh the factors in your own case. The courts have a fair amount of discretion when making their determination in this area. So, it is wise to speak about your own circumstances and concerns with an experienced divorce or attorney.

Contact Cardwell, Steigerwald Young

Our experienced team of San Francisco divorce lawyers at Cardwell, Steigerwald Young are standing by to discuss any of your divorce or property division concerns.

Source:

CA Family Code §2641