Money problems ruin as many marriages - if not more - than infidelity. Financial strain can be an incredible burden on a relationship. Student loans can be a significant source of stress. Not only can it be a possible catalyst for discord, but it can also be a factor in divorce as well. One survey found that student loan debt was a factor in 1 in 8 U.S. divorces.
According to NerdWallet, more than 60 percent of the class of 2019 graduated with student loan debt, the average for this class being about $30,000. A household debt study conducted last year showed the average U.S. household with student debt owes nearly $58,000. Nationally, that amount has climbed more than 60 percent in the last decade. The number of people who owe more than $50,000 has tripled.
These numbers can translate to monthly payments of hundreds if not thousands of dollars - sometimes just to make the minimum payments.
How Student Loans Are Handled in Divorce
How student loans are managed in a divorce will depend largely on when the loans were taken out. New Jersey is an equitable distribution state, which means family law Courts will split assets and debts in the manner deemed most fair, not necessarily 50-50.
Marital property - which is generally anything acquired during a marriage - is what is subject to equitable distribution. Assets or debts acquired prior to the marriage are usually considered separate property. Same with inheritances and gifts.
This seems fairly straightforward at first glance, but it can get tricky. For instance, you may have purchased your home before you got married, but if you both made mortgage payments and contributed to its upkeep and value, the lines of ownership and equity can be blurred.
If you acquired your student debt before you got married, it’s probably going to continue to be a separate debt for which your spouse isn’t responsible. Your spouse doesn’t automatically become responsible for your student loans just because you got married. (It becomes even simpler if you drafted a prenuptial agreement stating this outright.)
Where the waters can get muddied is if the pre-marriage debt has been paid with joint funds. However, if one spouse has substantially more debts or assets than another, the Court can take this into account and will try to balance it in a way that is most balanced.
If your student loan debt was acquired during the marriage it might be considered a joint debt, but the Court may consider the type of loan and whether there was a co-signer. In the case of federal loans, there is usually just one person’s name on the documents, and Courts may find that is the person responsible for continuing payment. However, lots of private loans require someone to co-sign. If you took out your loans while you were married, there’s a good chance the co-signer is your spouse. That means both spouses can be on the hook for those funds.
Courts will take into consideration, though, if one spouse supports another financially or through other means (i.e., childcare, housework, delaying their own career advancement, etc.) while the other is attending school full-time. Many times, the Courts will compensate the supporting spouse for their role in helping the other to earn a better education and higher-paying job.
Consult With a Divorce Attorney
Student loan debts, like so many other aspects of divorce, can easily become very complicated. It’s in your best interest no matter what side of the aisle you’re on to reach out to an East Brunswick divorce lawyer who is experienced, compassionate and prepared to answer any questions you have about your legal options.
Call Rozin|Golinder Law, LLC today at (732) 810-0034 for a free and confidential consultation.