What Happens to Student Loan Debt During a Divorce?


During a divorce, the matter of dividing a couple’s marital debts is given just as much weight as dividing their assets. While “marital debt” usually translates for most couples to mean debt from credit cards, for a growing number of college-educated spouses, there is another issue to contend with: student loan debt. Just what happens to student loans during a divorce? A recent Wall Street Journal article looking at this issue did a good job of breaking down the most common scenarios:

The debt is separate. If you or your spouse went to college and took out loans before you got married, in general, this debt is almost always considered separate debt and will not be considered part of a marital settlement.

The debt is shared under the terms of a prenuptial agreement. When couples sign a prenuptial agreement before getting married, there can sometimes be language included that addresses debt either spouse brings into the marriage, and what will happen to this debt in a divorce. Read the fine print carefully! In New Jersey, full financial disclosure is required under law at the time you sign your pre-nup in order to legally enforce it. This means that you should know exactly how much student loan debt your spouse carries before you sign on any kind of document agreeing to share in paying it off.

The debt is considered marital debt due to refinancing. If you and your spouse took advantage of low interest rates and refinanced your loans by rolling your separate debts into a single joint account, it will likely be considered a joint marital debt and be divided between the two of you.

The debt is considered marital debt due to how it was used. If your spouse took out a student loan debt and part of that student loan debt went towards paying your famiy’s living expenses, your spouse may be able to make the case that part of the debt’s repayment should be on your shoulders.

Just how common is student loan debt? Currently, college students who took out loans and earned bachelor’s degrees in 2012 graduated with an average $29,400 in educational debt, according to the Institute for College Access and Success, and those earning advanced degrees were typically on the hook for even more. Now multiply that by two (spouses) and you can see why this issue is a growing concern.

For more on marital debt and whether you’re in the clear when it comes to certain debt issues on the part of your spouse, see our blog: Telling The Difference Between Marital & Separate Property.