Divorce is an emotional whirlwind. Even while you try to heal your inner wounds, you must also focus on how to divide your life from your spouse’s. Many couples focus on splitting assets as they begin preparing for divorce negotiations, but you’ll also have to figure out how to deal with debt. Any debt incurred during the marriage is considered marital property, even if only one spouse took out the loan. Does this mean that you may be saddled with helping to pay off your spouse’s student loan debt even after your divorce? The answer might be yes!
Love and Debt
These days, a college degree is required for most well-paying jobs. Additionally, top professionals, like dentists, ophthalmologists, cardiologists, lawyers, architects, and others require a graduate degree or a doctorate. This education isn’t cheap. According to The Institute for College Access & Success, seven in ten college graduates take out loans to finance their degree, with the average amount of debt being $28,950 per borrower!
If your spouse got a graduate degree, his debt is likely to be even higher. In an article in U.S. News & World, Jason Delisle, director of the Federal Education Budget Project at New America stated that the average graduate student owes $57,600 in debt!
That’s a serious amount of money. If you are forced to make payments on your spouse’s loan, that could seriously impact your financial life as you try to recover from your divorce.
Marital Property or Not?
The most important factor in whether or not you are responsible for your spouse’s student loan debt is whether he took out the loans before or after you were married. In many states, as soon as you are married, any new income or debt earned by either spouse becomes marital property, shared by the couple.
If your spouse took out his loans before the marriage, that debt is entirely his in most states, and you will not be responsible for paying it off. The only exception is if you co-signed the loan. (Co-signers are often required for private loans.) If you are a co-signer, you may be on the hook if your spouse stops paying his loans.
What happens if your spouse went back to school during your marriage and took out loans during that time?
Understanding Marital Property and Student Loans
Whether you will be responsible for paying a portion of your spouse’s student loans that were taken out during your marriage will depend on the specific laws of your state regarding the division of marital property. Certain states, including many of those known as “community property states”, split all marital property (including debt) right down the middle. In other states, a judge has some leeway in determining how assets and debts are divided.
For example, let’s say that your spouse went to school to get a master’s degree in engineering, which allowed him to obtain a much higher-paying job. Six years later, you decide to get a divorce. A judge may be more willing to ask you to help pay off the student loan because you benefitted from your spouse’s increased income.
On the flip side of the coin, if you worked while your spouse was in school in order to support the family, a judge may decide that you already made payments toward the debt by your efforts. Also, a judge can certainly take your income into consideration. If you earn little or no income, a judge may determine that you don’t have the means to assist your spouse in paying off his student loans, especially if he earns a much higher income than you.
How Do I Figure Out How Much I Will Have to Pay for My Spouse’s Student Loans?
One important thing to keep in mind is that you always have the option of deciding how you want to divide your spouse’s student debt as part of your divorce settlement process as long as you and your spouse can agree on the terms. It’s not uncommon for both spouses to have student debt and to agree that each will take responsibility for their own student loans after a divorce.
It is always a good idea to consult with a divorce attorney who can explain the laws of your state and advise you on how to negotiate student loan debt responsibilities as part of your larger divorce settlement strategy. Also, if you need help preparing for your divorce, come to our next Second Saturday Divorce Workshop.
This article is reprinted with permission from the Women's Institute for Financial Education (WIFE.org), creator of the Second Saturday Divorce Workshops. Founded in 1988, WIFE is a non-profit organization dedicated to providing financial education for women. Copyright 2019