Divorce and student loans. Who is responsible for what?

Divorce and student loans. Who is responsible for what?

Who is responsible for a spouse’s student loans in a New York divorce?

According to CNN, 2013 college graduates averaged $35,200 in total student loan debt. Student loans often do not get paid off for years on end. Unpaid student debt can be carried into marriage and then, consequently, become an issue in a divorce. Upon divorce, who is responsible for the debt? The debtor? Both spouses?

A common misconception is that educational debt incurred before marriage becomes shared debt once the parties marry. Not generally true. Under New York law, the partner who entered the marriage with student loan debt generally leaves the marriage with that debt. The debtor spouse usually will not be able to obligate their spouse to share the burden. The rationale is that you cannot obligate your spouse to a debt incurred prior to the marriage. It was your debt and it stays your debt.

The trickier situation arises when student loan debt is incurred during a marriage. A determination must be made as to whether the debt will be shared as a result of divorce, and how much each partner will be responsible to pay. There are several reasons for the unsettled law. First, student loan proceeds may have been used to help cover the daily expenses of the couple. Second, one partner in the marriage may have become better prepared to earn a living as a result of the education they received by taking the student loans. But let’s not forget the other spouse. Third, if one spouse helped support the student spouse in the latter’s endeavor to obtain an education (such as by cooking, cleaning, and/or caring for children) that factor will be taken into account in New York in making the determination as to the division of student debt obtained by one spouse during the marriage. Courts will consider facts specific to each situation in making the debt-split determination.

The best way to safeguard against responsibility for the debt of a spouse acquired prior to marriage is a prenuptial agreement specifying the allocation of premarital debt upon divorce. In addition, if a party decides to obtain student loan debt during the marriage, the parties may enter into a postnuptial agreement indicating which party will be responsible for the student’s loan. As marital couples continue to become equal wage earners and share marital expenses, such agreements have become much more common.

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