Students Loans and Divorce

In recent years, the subject of ever-increasing student loan debt among the young people of the United States has been the focus of many conversations, news articles, and debates. The Institute for College Access and Success reported that for the college graduating class of 2012, approximately 70% of students had borrowed money to help pay for their educational costs, and the average debt per borrower was $29,700. If two spouses each have student loan debt, that debt can become a huge factor in their financial success and also in the case of divorce.

Many couples ask the question: Who is responsible for student loan debt after a divorce? The answer to this question is not always simple and depends on the circumstances of each individual case. There are several factors to examine in order to determine what will happen to student loan debt.

When Was the Debt Incurred?

If two people each enter into a marriage with student loan debt they took on prior to the marriage, that debt will usually be deemed separate and each spouse will be held responsible for only their respective loans.

If the student loan debt was incurred during the marriage in only one spouse’s name, the loans may be seen as marital or separate property depending on other circumstances. Even though most debt incurred during a marriage is seen as marital debt, if a student loan only benefitted one spouse, the court may rule that spouse is solely responsible for paying it back.

The situation becomes more complicated if both spouses signed for the loans. For instance, imagine a husband and wife co-signed student loans for the husband’s degree. During divorce negotiations, they agree that the husband will be solely responsible for making his own student loan payments. However, the husband does not have enough income to qualify for a refinance of the loans in only his name. Therefore, even though the divorce settlement states the loans are only his responsibility, the former wife’s name remains on the loans even after the marriage has been completely dissolved. In many cases, the former spouse’s name will remain on the loans for the life of the loan.

If the former husband defaults on his loans, the student loan company can still try to come after the former wife for the payment of the loans. Any negative payment information will also bring her credit score down, and challenging negative marks on your credit can be very challenging, even with a divorce decree that states the loans were not your responsibility. As you can see, the issue of student loans in divorce can be complicated and you always want to have representation by an experienced lawyer.

Call Experienced Divorce Attorney Alan R. Burton Today

If you are facing divorce in the Boca Raton or Fort Lauderdale areas, you should contact Alan R. Burton for assistance as soon as possible. Mr. Burton has extensive experience handling all aspects of divorce cases, especially the financial issues. He provides the highest quality of representation and will work to make sure you receive the best possible outcome in your divorce case. Contact our office today to schedule your free initial consultation.