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Divorce is probably not the first word that comes to mind when you think about repaying your student loans.
But for married couples who are splitting up, debt — and who’s responsible for it — can be a very real factor in a divorce settlement. So how is student loan debt divided in divorce?
There isn’t one right answer to this question — it depends on countless factors, often including what state you live in and got married in, and whether you have a prenuptial agreement.
Before discussing how divorce impacts your student loans, we want to be clear that nothing in this article should be taken as financial or legal advice. This broad overview of student loan debt responsibility post-divorce doesn’t take your unique circumstances into consideration, which is why we recommend discussing the nitty-gritty details with a financial advisor or attorney.
That being said, let’s look at how divorce might impact student loans in various circumstances.
Key Points
• Divorce may complicate the division of student loan debt, influenced by state laws.
• Loans taken before marriage typically remain the sole responsibility of the borrower.
• Post-marriage loans may be considered marital property and split 50-50 in community property states.
• In equitable distribution states, debt is divided based on fairness and what’s equitable, with courts considering factors like income.
• If a spouse is a cosigner on a partner’s refinanced student loan, they are equally responsible for the loan.
Addressing Separate Student Loans
When it comes to student loans, divorce can make things complicated. Separate loans are typically a little more straightforward, because if you’re the only name on the loan, you’re likely the only one responsible for repayment.
This is especially likely if the debt is in your name only and you took out the loan before you got married.
When you get a divorce, assets and debts are typically divided in part based on whether or not they are considered to be marital property (and this can vary by state, of course). You are typically responsible for loans taken out in your name before you were married, and likewise for your ex-spouse.
Debt in a divorce can get a little bit more complicated if you or your spouse took out a student loan after marriage. These loans may be considered marital property, depending on state laws and the circumstances under which you took out the loans.
When addressing marital property, most states either use community property laws, which implies that property or debt taken on during a marriage is jointly owned, or equitable distribution laws, where the property or debt belongs solely to the spouse who initiated the purchase or debt withdrawal. In states with community property laws, marital assets and debts are split 50-50 between ex-spouses.
Most states have equitable distribution laws, which can make dividing assets or debt a touch more confusing. In these states, each spouse has a claim to an equitable share of marital property, which may not be split 50-50.
Courts have final say over what’s fair and equitable, and to determine that, they may look at a spouse’s earning potential, or the support one spouse provided while the other was in school, such as childcare or even the opportunity costs of putting their own education on hold. Furthermore, if, for example, you or your spouse took out loans that were used to support you both, that could also be a consideration in court.
Approaching Refinanced Loans
It’s not possible for a couple to combine their separate student loans into a joint, refinanced loan. However, you can refinance your own loans and have your spouse serve as your cosigner.
When might that happen? If, for example, one member of a couple wants to refinance their loans but doesn’t qualify, their spouse may decide to cosign the refinanced loan in order to help them qualify or secure a better rate.
When couples cosign on their partner’s loans, both spouses are on the hook for the debt. While this may work while a couple is together, it can make things complicated when your ex-spouse is the cosigner of your refinanced loan. This new loan is owned by the couple, and may be considered marital property subject to community property laws or equitable distribution laws.
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Paying Your Part
In cases where debt is considered marital property, divorcing couples on good terms can decide how to divide student loan debt and have a court sign off on it. However, in some cases, ex-spouses may simply not be able to take charge of dividing things up, and the court can decide how the debt will be divided instead.
At this point, you’re losing the power of a combined income to pay off your loans, so you may need to consider strategies to help the newly-single you afford your payments.
Refinance Your Student Loans
First, you may want to consider refinancing student loans to potentially secure a better rate or term. A better interest rate and shorter term might help you pay down your debt faster and could reduce the money you spend on interest over the life of the loan.
Our student loan refinancing calculator could help you see how much you might save.
If you lengthen the term of your loan, you may be able to lower your monthly payments, which can help if your budget is strapped. However, longer terms typically mean you’ll end up paying more over the life of the loan.
Keep in mind that if you choose to refinance federal student loans with a private lender, you lose access to federal benefits, including income-driven repayment plans (discussed below) and student loan forgiveness.
Recommended: How to Refinance Student Loans After a Major Life Change
Use an Income-Driven Repayment Plan
Federal loans have income-driven repayment (IDR) options that can also help you lower your monthly payments. These income-driven repayment plans have you pay a conservative percentage of your discretionary income, generally 10% to 20%, toward your student loans each month. And if you pay your loans off on one of the IDR plans for a period of 20 or 25 years, your remaining balance may be forgiven (though that forgiven balance will be taxed as income).
Remove Your Student Loan Cosigner, if Applicable
If you refinanced your student loans when you were married and your spouse was your cosigner, you could also consider refinancing a second time — as an individual. This could allow you to not only qualify for new loan terms or rates, but also ensure that your ex’s name is no longer tied to your student debt.
The Takeaway
Getting a divorce is rough, and having to deal with student debt at the same time can feel like adding insult to injury. The paperwork, lawyers, and courts involved with a divorce can make it easy for things to get lost in the shuffle. Trying to stay on top of your student loans and making regular payments is, of course, an important priority.
Whether you’re interested in refinancing in order to lower your payments and make some room in your budget for divorce fees, or you want to refinance without your spouse as a cosigner, SoFi can help. With just a single application, you can compare rates from top lenders in just a few minutes.
FAQ
Am I responsible for my spouse’s student loan debt if we divorce?
A spouse is typically liable for student loans taken out in their name before marriage. However, if the student loans were taken out after you were married, the situation can be more complicated. In that case, the loans might be considered marital property; how they are treated in divorce depends on the laws in your state. If your state is a community property state, the loans would generally be treated as jointly owned. If you live in an equitable distribution state, marital debt is divided by the courts based upon what they deem fair and equitable.
Does my spouse take on my student loan debt?
Your spouse does not typically take on your student loan debt for loans you borrowed before you were married. However, if you took out student loans after your marriage, your spouse might also be responsible for that debt.
What happens if I marry someone with a lot of student loan debt?
If you marry someone with a lot of student loan debt, the debt remains theirs alone, unless they refinance the loans with you as a cosigner. In that case, you are equally responsible for the debt. Your spouse’s student loan debt could also potentially impact your approval for any loans you apply for together, such as a mortgage, since the loan debt would be included in your debt-to-income ratio, which lenders use to help evaluate a borrower’s ability to repay a loan.
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