Money problems ruin at least as many marriages as infidelity, probably more. Financial strain is a huge source of stress for many people, both individuals, and couples. One major area where we feel the pinch is with student loan debt. One recent study uncovers the major impact it has on marriage and divorce.
The tally of outstanding student loan debt in the U.S. tops $1.5 trillion—that’s trillion with a “T”—an all-time high. On average, the amount owed is $34,144, up more than 60% over the course of the last ten years. Over the same span, the number of people who owe north of $50,000 tripled.
With such astronomical sums in play, it makes sense this causes people a great deal of concern. Outside of buying a home, this likely represents one of your biggest debts. Monthly payments top hundreds if not thousands of dollars. And that’s often just to stay afloat. Money causes a great deal of stress, which puts a strain on a marriage, and student loan debt is frequently a big part of this.
According to one recent report, “one-third of borrowers said college loans and other money woes contributed to their divorce.” The study, which surveyed more than 800 adults, found that one in eight divorcees, or 12.5%, place the blame primarily on student loan debt.
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Student Loan Debt and Divorce
Not only does student loan debt often place additional strain on a marriage, but it can also play a part in the divorce. Depending on the state you live in, and when the loans were taken out, they may factor into the divorce settlement.
When it comes to the division of property, Oregon is an equitable distribution state. This means the courts divide all assets, as well as all debts, in a fashion they deem fair. You must determine if a particular item is a marital or separate property. This influences how you split things up.
The definitions are fairly simple. Marital property is generally anything acquired during a marriage. On the other hand, separate property consists of things obtained outside the marriage. This can also include things like gifts or inheritances. That sounds simple, but circumstances can get muddy. For example, if you owned a home before, but later use joint funds to make mortgage payments, that blurs the lines of ownership.
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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. Again, situations like making payments from commingled funds can change things a bit. If one spouse also has substantially more debt, that can influence the divorce settlement as the courts attempt to reach a reasonable balance.
Student Loan Debt After Marriage
Student loan debt in a divorce becomes a bit more problematic when you acquire it during 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.
Another thing to consider is who makes the payments. When one spouse goes to school full-time, it’s common that the other takes the breadwinner role. If you support your partner or 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 can all factor into the agreement. In cases where one spouse helps advance the other’s earning potential, that often factors into spousal support awards.
Like most matters involving marriage, divorce, and money, student loan debt can get complicated in a hurry. It’s likely in your best interest to seek out professional guidance in the form of a financial advisor or an experienced divorce lawyer. It may help you in the long run.