How Is Student Loan Debt Divided In Divorce?

Key Takeaways:

• The tally of outstanding student loan debt in the U.S. tops $1.8 trillion
• 12.5% of divorces are attributed primarily to student loan debt.
• Student loan debt acquired before marriage usually remains separate property.
• Dividing student loan debt acquired during the marriage varies depending on the types of loans.
• Federal loans generally stick with the borrower, while private loans can get murky.
• If one spouse has substantially more debt, it can influence the divorce settlement as the courts attempt to reach an equitable balance.
• In cases where one spouse helps advance the other’s earning potential, it can affect spousal support.

Financial strain is a huge source of stress for many people, both individuals and couples. One area where we feel the pinch most is student loan debt.

The tally of outstanding student loan debt in the U.S. tops $1.8 trillion—that’s trillion with a “T.” That’s an all-time high, and it gets bigger every year. On average, the amount owed is $34,144, up more than 60% over the last ten years. Over the same period, the number of people owing more than $50,000 tripled.

How Does Student Loan Debt Affect Divorce?

With such astronomical sums at play, it makes sense that this causes people considerable concern during a divorce.

Monthly payments top hundreds of dollars, if not thousands. And that’s often just to stay afloat, not even to pay down the principal.

One recent study uncovers the impact this has on marriage and divorce.

According to the report, “one-third of borrowers said college loans and other money woes contributed to their divorce.”

The study surveyed more than 800 adults and found that 12.5% of divorces are attributed primarily to student loan debt.

Is Student Loan Debt Divided in Divorce?

Not only does student loan debt often place additional strain on relationships and marriages, but it can also contribute to divorce. Depending on the state where you live and when the loans were taken out, they may factor into the settlement.

When it comes to property division, Oregon is an equitable distribution state. This means the courts divide all assets and debts in a manner they deem fair. You must determine if a particular item is marital or separate property. This influences how you split things up.

The definitions are fairly simple on paper. Marital property is generally anything acquired during a marriage. On the other hand, separate property consists of things obtained outside the marriage. This also includes gifts, inheritances, and other items.

Related Reading: How Do Major Purchases Affect Divorce?

Acquiring Student Loan Debt Before Marriage

For the most part, student loan debt acquired before marriage remains separate property.

It doesn’t necessarily become a shared obligation when you tie the knot. Each spouse takes responsibility for their own loans, and things can be relatively simple. You can even draft a prenuptial agreement saying as much.

Situations like making payments from commingled funds change things a bit. If one spouse has substantially more debt, that can also influence the divorce settlement as the courts attempt to reach a reasonable balance.

Acquiring Student Loan Debt During Marriage

Student loan debt in a divorce becomes a bit more problematic when acquired during the marriage.

Things also vary depending on the types of loans. With federal loans, for example, the name on the paperwork matters most. If they’re yours, they generally stick with you.

Private loans usually require a co-signer, which, in the case of married couples, is most often a spouse. This can put both parties on the hook for the money owed.

Related Reading: Dividing Debt in Divorce

Other Factors To Consider

Another thing to consider is who makes the payments. When one spouse goes to school full-time, it’s common that the other takes on the breadwinner role.

If you support your partner and make payments on their student loans, the court may compensate you in the divorce settlement. This doesn’t just include straight monetary support either.

Driving them to school, delaying your own work or educational advancement, or even pitching in more around the house or with raising children all can and often do factor into the settlement.

Generally, student loans stay with the student. But in cases where one spouse helps advance the other’s earning potential, that often plays a part when awarding spousal support.

Related Reading: Whether or Not to Sell Your Home During Divorce