Spouses preparing for divorce often have many questions about the process. They want to know what assets they have to divide. They may also have questions about how they share financial responsibility for marital debts. The financial decisions made during divorce can affect the spouses for years to come.
Couples generally have to divide assets and income that they acquired during marriage. They may also have to share responsibility for debts that they took on during the marriage. Marital debts can strain budgets as people adjust to life after divorce. Most people seek to limit what debt they must assume while maximizing how much of the marital estate they retain.
With the exception of home mortgages, student loans are often the largest debts that people have to address when they divorce. Those who attend college, graduate school or even vocational programs could have tens of thousands of dollars in debt.
Are student loans in the name of either spouse potentially marital debts that they’ll have to divide?
Student loans can be marital debts
The loan paperwork naming one spouse as a borrower for the student loans does not automatically make them solely responsible for that debt. Timing and intention are the two main considerations when determining if a debt is the responsibility of both spouses or just one spouse.
Student loans taken on before the marriage or after spouses separate are likely the sole responsibility of the borrower. However, many people may continue their education after getting married. One spouse might go back to graduate school or finish a degree after having children.
Student loans taken on during the marriage are potentially part of the marital estate that can be factored into property division decisions. The goal behind securing an education is typically to improve earning potential and therefore the financial circumstances for the entire family.
In some cases, spouses can negotiate arrangements where each adult takes responsibility for certain debts. Other times, they might use marital resources to pay off debts as part of the divorce process. It may also be possible to exclude certain debts from property division discussions.
Determining if student loans may be part of the marital estate is an important part of preparing for asset division during divorce proceedings. Large debts can be as important to consider as valuable property during a divorce.