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If you’re going through a divorce and you or your spouse have student loan debt, the situation can seem complex—especially if you incurred the debt after you got married.
Here’s what you should know about how divorce can affect your student loans.
In this guide:
- Premarital student debt
- Postmarital student debt
- How the state you live in affects student loans in divorce
- Student loans and divorce FAQ
Premarital student debt
If one or both of you took out student loans before you got married, it does not become shared debt or community property after marriage. In most cases, if you or your spouse took out student loan debt before you got married, it stays with the one who took out the loan.
For example, if you took out student loans for dental school before you were married, don’t expect your ex-spouse to foot half the remaining balance. They aren’t generally responsible for debt you incurred before marriage.
Exception: If you signed a prenuptial agreement that specified the student loans would become a marital debt, read the section below for more guidance.
Postmarital student debt
If you took on student loan debt after you got married, the division of debt may be more complicated. This can also be the case if you refinanced debt after you got married, and your spouse was a cosigner or coborrower.
If you went back to school after you were married and took out student loans, it may not be considered marital debt if only one person is on the loan. If you’re not sure, look at the original promissory note you signed.
How the state you live in affects student loans in divorce
In a divorce, you’ll split assets and liabilities one of two ways:
- Equitable distribution (according to what is fair, which may not be 50-50)
- Community property (an arbitrary 50-50)
“The state you get divorced in has everything to do with how that debt is handled—unless it’s already dealt with in a prenup,” said family lawyer Rebecca Green Neale.
In a community property state, the debt may be divided 50-50, and the courts might consider the value of the degree a marital asset and subject to division.
In an equitable distribution state, the court will consider several factors when deciding how to distribute the debt, such as:
- Did your spouse support you financially?
- Did they take over all household duties?
- Did they delay their education to help you through dental school?
Other factors could affect the distribution of debt. For example, if you signed a prenuptial agreement specifying student loan debt accrued after the marriage is the responsibility of the person who took out the loans, this is likely to stand.
Which states are community property states?
The U.S. has nine community property states, which means by law, both parties own the assets and liabilities.
These states are:
- New Mexico
If you live in one of these states and took out student loans during the marriage, both you and your ex-spouse may be legally liable.
Which states are equitable distribution states in a divorce?
The following states are equitable distribution states:
- New Hampshire
- New Jersey
- New York
- North Carolina
- North Dakota
- Rhode Island
- South Carolina
- South Dakota
- Washington, D.C.
- West Virginia
In an equitable distribution state, the court will look at several factors to decide how much each person will receive during the split.
Student loans and divorce FAQ
What if my spouse or I cosigned the other’s student loan debt before the divorce?
If you cosign a loan for a spouse, divorce will not remove you from the loan. The lender does not care whether you split up.
The only way to remove yourself as the cosigner is to see whether the lender offers cosigner release. Some companies let you remove a cosigner after a certain period of time. To qualify for cosigner release, the main borrower must qualify for a loan by themselves.
If the lender doesn’t offer cosigner release, your partner can refinance the loan without you. The divorce decree should state they must refinance the loan.
However, that doesn’t mean they’ll find a lender to approve them. If they can’t, you’ll remain on the loan until they qualify to refinance by themselves.
What if my spouse and I consolidated our student loan debt before the divorce?
From 1992 to 2006, married borrowers could combine their federal student loans into a joint federal spousal consolidation loan. But if they got divorced, they couldn’t split the loan in two.
In 2022, however, Congress passed the Joint Consolidation Loan Separation Act, which will let borrowers divide a spousal consolidation loan into separate loans based on their previous balances. Even if you don’t get divorced, you can opt to split your spousal consolidation loan into two separate loans.
What can my spouse and I do to prevent divorce-related student loans issues?
If you’re getting married with student loans or other debt, consider drawing up a prenuptial agreement stating what will happen if you get divorced. Make sure to hire a lawyer who specializes in prenups.
If you’re already married, you may be able to draft a postnuptial agreement stating what happens if you get divorced. For example, you can stipulate that if one person’s income was used to pay off the other person’s student loans, the other person must be made whole in the settlement.
As of December 2022, the only states in the country that don’t allow postnuptial agreements are Ohio and Iowa.
Note: You or your spouse may be able to contest a prenup or a postnup in a divorce. If you live in a state that allows postnuptial agreements, find a lawyer with experience drafting them.
Author: Zina Kumok