Student Loans and Divorce
October 19th, 2015
Contributor: Cassandra Musser
Financial distress is a major contributor to the breakdown of many marriages. The student loan crisis in America is reaching epidemic proportions, with 1 in every 5 households paying on an outstanding educational loan, and 10% of households owing more than $61,894.00 in student loan debt. If you married your spouse before he/she entered an institution of higher education, or while he/she attended an institution of higher education, you might be obligated to pay a portion of the outstanding debt in a divorce.
During a divorce, the court will have to determine whether the student loan debt is marital or separate property. Michigan case law does not clearly address whether student loan debt incurred during the marriage is a marital debt that should be divided between the parties. Generally speaking, regular household debts incurred during the marriage are assumed to be joint debts regardless of who assumed the obligation. Student loans are sometimes considered separate if they were incurred solely for one spouse’s education. However, if the borrowings went to support the household, they will often be treated as joint.
Therefore, regardless of whether your spouse graduated and earned a degree, if you and your spouse lived off of student loans during the marriage, a court may order the student loan debt to be divided between the parties.
Sources: Sanburn, J., (2012, September 27). The Student Debt Epidemic: 1 in 5 Households Now Owe Student Loans. Time.