In a divorce, student loans can be divided based on when the debt was borrowed or via an agreement you reach with your spouse, or by court order.
You might expect that student loans will stay with the person whose education the loan paid for after a divorce. But that’s not always the case. Typically, student debt borrowed before the marriage is considered separate property, which won’t be split between spouses. Student loans borrowed or refinanced during the marriage are trickier. Those debts may be deemed marital property — especially if the person pursued higher education to increase their earning potential to benefit the marriage.
Keep scrolling to learn how divorce impacts student loans.
What happens to student loans in a divorce?
Divorce doesn’t change your legal obligations for the loan — even if you live in a community property state. The Department of Education or private loan holder will continue to demand payment from you if you’re the primary borrower or cosigner. However, depending on where you live and when the loans were borrowed, the marital dissolution can force you to make payments on your ex’s student loans. Here’s what happens to student loans in a divorce:
Student loans in your name: Your student loan debt remains your legal responsibility — even if the judge orders your spouse to pay back your loans.
Student loans in your spouse’s name: Your spouse’s student loan debt remains their responsibility. If your divorce decree orders you to pay their debt, your former spouse isn’t released from their obligation. However, they could seek to hold you in contempt for not complying with the court order.
Student loans that are cosigned: Divorce doesn’t let the cosigner off the hook for student debt. The lender can demand payment from the cosigner until the account is resolved. If your spouse has a good credit score and enough income, you can apply for a cosigner release before or after your divorce.
Joint spousal consolidation loans: Ending the marriage doesn’t free either spouse from the loan. You both will be tied to it until the loan is paid off or one of you refinances it into your name. My article on Spousal Consolidation Student Loans and Divorce is a great read for more information.
Student loans borrowed or refinanced during the marriage: If you live in a community property state — Arizona, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin — the debt can be considered a marital debt that you’ll share liability for. But if you live in an equitable distribution state — every other state except California, which has a special rule — the court will evenly divide the debts, including student loans, between the parties. In doing so, the judge will look at whether the loans were used primarily for tuition or living expenses, how much each spouse contributed, and other factors.
Although California is a community property state, student loans are treated as non-marital, separate debt even if the debt is acquired during the marriage. Check out California Family Code 2641 to read the law.
Who pays student loans in divorce?
Your state’s laws will control who pays student loans in divorce unless you have a prenup or negotiate a different treatment as part of your dissolution of marital assets and debts. Here’s the general rule of which spouse is responsible for student loans in divorce or legal separation.
Student loan debt incurred before marriage: Each spouse is responsible for their federal student loans and private student loans.
Student loan debt incurred during the marriage: You may get stuck paying your former spouse’s loans if you live in a community property state, the judge orders you to pay your former’s spouse’s debts, or you have a prenuptial agreement covering loans for educational purposes.
Student loan debt refinanced during the marriage: If you live in a community property state, you could be responsible for student loans your ex refinanced during the marriage — even if the education debts were initially borrowed before the wedding.
The simplest way to split student loan debt in divorce is to decide that each spouse keeps the education debts they incurred before and after the marriage. The benefits of the training and education received stay with the spouse well after the last loan payment. So it can make sense to separate the debt based on who borrowed it.
But there are many situations and reasons where that type of split is inequitable for divorcing couples. You’ll want to speak with a divorce attorney where you live to understand your options for dividing the student loan debt.
Remember that divorce doesn’t change your legal obligation on federal and private student loans. The agreement you reach with your ex-spouse will determine whose supposed to make the monthly payments. But if you want to be free from the debt truly, then having them transfer the loans into their name with student loan refinance is the best move. Refinancing may save them money depending on their credit by offering lower interest rates over the loan term.
I paid off my spouse’s student loan debt. Now we’re divorcing. What next?
You recently paid off your ex-spouse’s student loans. You may be able to force them to pay you back. Have your family law attorney assess if you have an argument for reimbursement.
You paid off their student loans years ago. Making the case that you should be reimbursed for paying off your spouse’s student debt ages ago is challenging — especially if they were maintaining the home and raising children.Ask your attorney to examine your facts and assess your chances of getting at least some of the money you paid returned.
When you discuss with your ex how to handle child support, alimony, inheritances, etc., it makes sense to determine how you’re going to manage student loan debt. Let’s talk if you need help understanding your options. Schedule a call to get started.