Student loan debt is a reality for millions of Americans, and the price of college tuition has skyrocketed over the past few decades. Additionally, student loans carry relatively high interest rates, making it harder for debtors to pay them off. More people are defaulting on student loan debt than ever before.
For couples facing divorce, the chances are much higher today that at least one of the spouses will have some measure of student debt. The spouse without any debt may wonder if he or she must pay back their soon to be ex-spouse’s debts. In order to determine the level of responsibility one might have in these situations, it’s important to understand community property law.
What is Community Property?
Basically, all the property gained by a married couple during the course of a marriage is community property that is equally owned by both spouses. This applies to debts as well as assets: any debts incurred by either spouse during the marriage become the obligation of both spouses. However, there are some exceptions to this rule, and most determinations are made on a case-by-case basis in accordance with all applicable state laws.
Income earned by either spouse during a marriage is considered “community property” because this money is usually used for things that benefit both partners. When that money is used to the benefit of both, it cannot be reimbursed during a divorce proceeding if the spouse arguing for reimbursement benefitted from the investment. Obviously, situations like these can quickly grow complicated, and you’ll need to establish how much your spouse benefitted from an investment if you expect him or her to continue paying for your debts.
Student Loan Debt as Community Property
If one spouse’s student loan debt comes up in divorce proceedings, the court will examine several factors to determine whether or not the other spouse must carry the burden as well. Primarily, when the loan was taken out will be a crucial factor. If the spouses agreed to take on the loan during the marriage, then the other spouse may have to continue helping to pay the student loan. This is especially true if the other spouse visibly benefitted from the other’s education. For example, if one spouse’s degree enabled him or her to secure a higher-paying job, this would have clearly benefitted the other spouse.
However, in some situations, a spouse may actually be reimbursed for monies he or she already paid into a student loan for the soon-to-be ex-spouse. If ten or more years have passed since the other spouse’s degree was awarded, then reimbursement typically doesn’t happen. Additionally, you cannot argue for reimbursement if you provided written, signed consent to pay for the loans. Whether or not one spouse must pay for the other’s loans after divorcing hinges on how much he or she paid into them and how much he or she benefitted from their spouse’s education.
Ultimately, if you helped pay for your ex-spouse’s student loans or any clear benefit of their education for you can be established, you may not be able to argue for reimbursement for your contributions, and may need to continue helping pay for the loans. However, this is the less likely outcome, and more often than not the spouse who took out the loan will need to continue paying it on his or her own after the divorce. If debts are going to be a major consideration in your impending divorce, it’s important to thoroughly discuss these details with your attorney and make sure you aren’t paying for your ex-spouse’s debts when the law doesn’t require you to do so.