Student Loans and Divorce: Who Foots the Bill?

Student loan debt is one of America’s biggest financial crises of the 21st century. At more than $1.6 trillion, the nation’s total amount of student loan debt cripples the budgets of more than 44 million Americans.

As such, many of today’s couples take on each other’s student loan debt when they get married—or they get married first and then support each other as they go to school.

But commingling finances is almost always easier than disentangling. If you and/or your spouse have incurred student loan debt, and you are now getting a divorce, will the court split the total amount of debt between the two of you?

As with assets and other types of debt, family courts in community property states treat student loans acquired during a marriage as community property. If you get a divorce, therefore, the court may divide the total student loan debt between the two of you—even if only one of you borrowed the loans.

However, California (a community property state) names student loan debt as an exception to this general rule. If only one spouse’s name is on the loan, and the couple divorces in the first ten years of marriage, the spouse who did not borrow the loan is not liable for that debt.

To make matters more confusing, there are several exceptions to this exception. For example, both spouses may be liable for one spouse’s student loans if:

  • The spouse who did not borrow the loans substantially benefited from the other spouse’s higher education and resulting economic contributions
  • Both spouses used community funds to obtain degrees (and corresponding debts)

Another factor that may complicate the division of student loan debt is how the borrower used the loans. If they used the loans to purchase assets or other properties that the other spouse frequently uses, the court may be more likely to split the debt.

As with all other financial matters within a divorce, the court will heavily consider the financial circumstances of each individual. Judges use their discretion to issue rulings they believe are fair and equitable. So, even though California is a community property state, marital debt and assets might not be divided equally.

Unfortunately, this means there is no fast-and-hard rule as to who will be responsible for what amount of student loan debt. Only an experienced attorney can assess your case, provide clarity, and develop the legal strategy you need during this challenging time.

Let the Law Offices of Jeffrey S. Graff Handle Your Case

The division of assets and liabilities can be enormously stressful. I, Jeffrey S. Graff, want to use my 35+ years of experience to advocate for your best interests and protect your financial security. After representing thousands of families, I have the knowledge and resources needed to maximize your likelihood of achieving a favorable resolution.

Schedule your complimentary case evaluation by calling (805) 633-4999 or contacting my firm online.

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