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How are student loans distributed in a divorce?

On Behalf of | Oct 1, 2021 | Property Division |

You may be surprised to learn that the average age at which a person gets a first divorce in the United States is 30. Considering that nearly 14% of this country’s population has student loan debt, it is easy to assume that many people going through a first divorce have some amount of it.

In any state, if a person incurs debt prior to marriage, that debt would be the person’s separate property. The only other individual who could be held responsible for repaying a student loan taken out before a marriage would be someone who cosigned on the loan. However, things can change if a person incurs debt during marriage.

Understanding state laws

In community property states, all assets acquired and debt incurred during a marriage belong equally to both spouses. By contrast, in equitable distribution states like Florida, the general rule is that a spouse who takes out a student loan during their marriage will be responsible for repaying it after their divorce

Exceptions

One exception to this would be if you and your spouse refinanced your separate student debt and combined your loans into one – which is no longer even an option for federal student loans. Another exception could exist if you co-signed on your spouse’s loan. In that case, your spouse as the primary borrower would need to sign a co-signer release to relieve you of all responsibility. Otherwise, the two of you will need to sort out a way of paying the debt back together.

Though determining responsibility for student loans is comparatively easy in an equitable distribution state, the same cannot be said for the division of marital assets and debts. Since equitable distribution states do not require courts to divide property equally in a divorce, a judge can split property however they think “fair.” Ideally, your family law attorney could help you and your divorcing spouse reach a negotiated settlement concerning asset distribution – without having to have a judge make the decision.