Who pays for student loan debts at divorce?

Dear Lady Esq.,

What if you take out a student loan while you are married, and then you get divorced? Are student loan debts different that other debts such as credit cards?

- Anonymous Commenter

The following legal advice is meant for California residents only. No attorney-client relationship is entered into by the giving of the advice below. Advice is relied upon at the reader’s own risk.

Dear Anonymous Commenter,

Now this one is a little trickier. The rules and exceptions about student loan debt incurred during marriage can be found under California Family Code Section 2641.

The general rule is that the party who took out the loan for his or her own education or training is 100% responsible for paying back the loan at divorce or legal separation. It is also the general rule that if the education or training was paid for during the marriage, when you divorce or legally separate each of you are entitled to reimbursement for half of what was spent on education during the marriage.

This general rule, however, is filled with A LOT of exceptions.

If the community (husband and wife during marriage) benefitted from the education or training, then each person could be on the hook for half of the cost of that education or training.

For example, let’s say while you were married you incurred $100,000 in student loan debt to become a lawyer, and then you worked during the marriage for many years as a lawyer, making better income than you would have if you hadn’t gone to law school. In this case it is likely the Court will find that the community (husband and wife during marriage) benefitted from the education, and therefore at divorce each of you will be responsible for half of the remaining student loan debt.

It is presumed that the community benefitted from the education or training if it happened more than 10 years before divorce or legal separation, and it is presumed the community did not benefit from the education or training if it happened less than 10 years before divorce or legal separation. But this presumption can be overcome, depending on the evidence in your particular case.

So, for example if last year your husband graduated from medical school with $50,000 in student loans and yesterday he filed for divorce, he will probably be 100% responsible for paying back his loan. But if he became a doctor 15 years ago and still owes some money on his medical school loans then it is likely that both you and your husband will be responsible for paying back half of the debt remaining at the time of divorce or legal separation.

Also, if the education or training was paid for outright during the marriage, the community (husband and wife) are each entitled to reimbursement for half of what was paid out, including the legal rate of interest, which is currently 10%.

So, as is the case with many areas of family law, there is no outright answer. It depends on the facts in your particular case. If you are thinking of filing for divorce or legal separation and either you or your spouse incurred student loan debt or paid for education or training while you were married, the first thing you want to do is speak with a local attorney, tell them all of the facts of your case, and find out what you’re entitled to or liable for in your particular situation.

And yes, student loan debts differ from credit card debt. In general, credit card debt is going to be split 50/50 upon divorce or legal separation, regardless of whose name the credit card was taken out in, and regardless of whether or not you knew that your spouse incurred this credit card debt. This rule also has exceptions, and depending on the facts of your case, a good attorney can make an argument that more or all of the debt should be assigned to your spouse when the property and debt are divided.

- Lady Esq.