Divorce With Respect

I paid my spouse’s student loans; now they want a divorce!

On Behalf of | Feb 1, 2019 | Division Of Assets, English, Firm News | 0 comments

Bringing a considerable amount of student loan debt into a marriage is not an uncommon thing in California and across the nation. In fact, a February 2018 CNBC article estimated that approximately 70 percent of students graduate college with a large amount of student loan debt.

While student loan debt can lead to financial difficulties and even divorce for some, few people ever worry that the only reason their spouse married them was to ensure that the spouse’s student loans were paid back. Unfortunately, such was the case for one scorned spouse, which begs the question:

What happens to student loan debts in divorce?

If the loan was acquired before the start of marriage, then the debt is considered separate property. If the loan was acquired during marriage and it substantially enhanced that party’s earning capacity, the loan must be assigned to the party. However, the required assignment of debt must be reduced or modified if the circumstances render it unjust. For example, if the parties substantially benefited from a high earning employment position requiring higher education, the party that acquired the loan can request the assignment to be reduced.

Can I recover what I paid on my spouse’s student loans? 

Likewise, if the loan was already paid during the marriage with community contributions, the community can be reimbursed for contributions to education or training that substantially enhances the earning capacity of the party. However, the reimbursement can be reduced based on the following circumstances:

  • The community has substantially benefited from the education of the party. If the education received was less than 10 years before the start of the divorce, then it is presumed the community has not substantially benefited, and if the education received was more than 10 years before the start of the divorce, it is presumed the community has substantially benefited.
  • The education or training received by the party is offset by the education or training received by the other party for which community contributions have been made.
  • The education or training substantially reduces the need of the party for support that would otherwise be required.

The best thing to do in a situation like this is to speak with a skilled family law attorney. Those who have experience handling a variety of complex property division issues are well equipped to help individuals account for all liabilities, determine how each liability was dealt with and whether a payment for a debt should be reimbursed.