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Student loans and divorce: What happens?

On Behalf of | Apr 10, 2023 | Family Law

Student loans are a major issue in the United States. They are the second-highest source of debt people carry – behind only mortgage loans. Some reports claim that the total amount of student loan debt is $1.59 trillion. And that was in 2022, so it is likely much higher now.

Couples who are getting divorced need to divide their assets, but they also need to divide their debts. Considering that student loans are probably going to make up such a major portion of their total debt, how should they address it? Do they have to split the debt up between the two of them? Does the debt stay only with one person? This is a very significant financial question to ask.

It depends on when you took the debt out

One of the biggest factors that will influence how debt is divided is just when those student loans were taken out. If they were taken out by one person prior to the marriage, then they are separate property, in most cases. This means that the person who took them out simply keeps the full balance of the debt in the divorce, and their ex is not responsible for any of it.

However, if a couple got married before they took out their student loans, then those loans are marital debt. This means that they would need to divide them, as both people would be responsible for the loans. This is true even if only one person was actually attending school. There can also be situations where a loan has been refinanced or where people have cosigned jointly, in which case the loans are likely marital debt that is owned by both individuals.

Dividing assets and debts gets complicated and there is a lot at stake when considering your financial future. Be sure you know about all of your legal options.

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