Are Student Loans a Part of Marital Debt?

Updated on December 15, 2023
Updated: October 12, 2023

Are student loans a part of marital debt? In the US, student loans are not usually considered marital debt. Marital debts are typically accumulated during marriage. Student loans are the borrower's responsibility, regardless of marital status. However, some states include student loans as marital debt in certain situations. Contact Tommalieh Law to speak to a knowledgeable divorce lawyer in Orland Park for more information regarding student loans.

Who Pays Student Loans in Divorce?

During a divorce, it is important to determine who is responsible for repaying student loans in the marriage. Factors such as when the loan was taken out, and where the couple lives, are important in determining responsibility.

Student Loans a Part of Marital Debt

Generally, the borrower has the sole responsibility for separate debt or loans taken out before or after the marriage. If an ex-spouse cosigned the loan, they may still have to make monthly payments after the marriage ends. This includes parent loans where one spouse cosigned for their child's professional degree tuition.

When One of You Co-Signed a Student Loan

When a couple gets married, their finances combine. It can be hard to tell which debts belong to each spouse, especially if one cosigned a student loan for the other. In this case, both are responsible for the debt, no matter who borrowed the money.

If one spouse doesn't make payments, the other will be held accountable. Their wages or tax returns could be garnished. When divorcing, the courts decide who is responsible for repaying cosigned student loans based on factors like who took out the loan and when. State equitable distribution or community property laws also play a role.

Sometimes, if the cosigner can prove they didn't benefit from the loan, they may not have to repay. Talk to a lawyer to understand your marital property and separate property rights when cosigning a student loan.

Is Student Debt Divided In Divorce?

During the divorce process a couple must divide their assets and liabilities, this includes the division of student loan debt. The division of this debt depends on the state they live in and the circumstances of their marriage.

In some states, student loan debt is part of the marital estate and subject to division. In other states, it remains the responsibility of the spouse who took out the loan.

student loan debt written out on a chalkboard

During divorce proceedings, couples can also choose to divide the debt differently than what the state laws dictate. They may assign certain loans to one spouse or agree to split the private or federal loan balance after the educational degree graduation. 

How Does The Court Treat Student Loans?

Student loans can be divided between couples in a legal separation. The court treats the issue of student loans like any other debt when dividing marital assets and debts. The court considers the equity in the couple's combined assets.

If one spouse has more equity, they may have to pay off a larger portion of both spouses' outstanding student loan debts. In most divorce agreement cases, student loans are considered marital debt and can be divided in a divorce. 

Acquiring Student Loan Debt Before Marriage

Student loans cause financial strain and anxiety for many people. Over 44 million Americans have student loan debt, with an average debt of over $37,000.

When getting married, consider how student loan debt will affect the relationship. If the debt was acquired before marriage, it remains the borrower's responsibility and is not considered marital debt in most states. If a spouse cosigns a pre-marriage loan, they may be responsible for repayment if the partner fails to pay.

Acquiring Student Loan Debt After Marriage

Marriage combines two people's financial histories, including both good and bad debt. Student loan debt is a common type of debt brought into a marriage. It must be paid back with interest.

a man holding credit cards for his student loan

If taken out after marriage, it is considered marital debt and can be divided into a divorce. Some states may also consider student loan debt taken out before marriage as part of the marital estate if payments were made from joint accounts or both spouses used their income to pay it off.

Couples should understand the court's treatment of student loan debt when dividing assets and liabilities in a divorce.

What Are the Tax Implications of Holding the Student Loan Debt?

Marital debt and student loans have varying tax implications. The IRS considers student loan debt separate from other marital debt. If one partner has a student loan, they are responsible for paying the associated taxes. If both partners have separate student loans, they are each responsible for their loan payments and taxes.

However, if a couple has a joint student loan, they may be eligible for a tax benefit deduction on the interest paid, as long as they meet IRS requirements.

Can Student Loans Be Allocated Unequally?

Dividing student loans in a divorce is complicated. It's hard to decide who will be responsible for which portion of the loan if both parties have student loan debt. Unequal allocation of the debt may be an option.

a student loan application on a desk

The couple must negotiate and reach a fair agreement on who takes responsibility for which part of the loan. This agreement should be documented in the divorce settlement. A fair agreement on student loan allocation can simplify the division of assets and debts in a divorce. Consider all factors related to student loan debt when deciding marriage and divorce.

Call Tommalieh Law Today!

Student loans can affect marital debt. Whether student loan debt is marital debt depends on the state and timing of the loan. Laws on debt distribution in divorce vary by state. It is important to seek legal advice from a family law attorney to protect your rights.

At Tommalieh Law, our student loan lawyers specialize in handling the complexities of dividing debt and assets during divorce. Our experienced divorce attorneys are available to provide top-notch legal advice and representation. Schedule a consultation to find out how we can help you.

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