Over 43.6 million Americans have federal student loan debt. That means if you’re in the midst of a divorce in California, it’s likely that you’re still paying on your student loans. You may be wondering how student loan debt is handled during a divorce. Or, will you be responsible for your ex’s student loan debt even after your divorce? Could your ex be liable for your student loans?
As student loan debt continues to rise, these questions are becoming more and more common. In this article, we will explore divorce in California and discuss how student loans are handled in a California divorce.
California – A Community Property State
California follows the community property system, meaning that assets and debts acquired during the marriage are typically considered community property (unless a prenuptial agreement states otherwise) and are subject to equal division between spouses. Any debts or assets acquired before the marriage are considered separate property and are not divided during the divorce.
However, student loan debt is an exception to this rule. Student loan debt is treated differently than other types of debt.
How Student Debt is Assigned in a Divorce
California law (CA Family Code §2641) considers student loan debt to benefit the individual, meaning the person’s education will continue to benefit them after the divorce, so the other spouse shouldn’t have to continue to pay for that educational debt.
The law assigns loans taken out before or during a marriage to the spouse who received the education or training. That means if you took out your student loan before you were married or during your marriage, the state considers that debt your sole responsibility during a divorce.
There are, however, some exceptions. Student loan debt may be divided between the spouses if:
- Both spouses benefited from the training, education, or student loan.
- The training, education, or loan taken out by one spouse offset the training or education their spouse received, resulting in community contributions.
- The education received by a spouse through a student loan reduces their need for alimony.
There are no specific rules about the factors listed above when determining what will happen to your student loan debt or that of your spouse. The courts have a fair amount of discretion when making this determination. These factors should act as a guide during negotiation or litigation that may arise.
Determining if the Loan Benefited the Community
The court will determine whether the community benefited from the student loans, and they will use the following assumptions when making this determination:
- The community did not benefit from the student loan debt if the loans were incurred less than ten years before the beginning of the divorce.
- The community did benefit from the education if the loans were incurred more than ten years before the start of the divorce.
You can overturn these assumptions by providing opposing evidence. For example, suppose your student loan was incurred less than ten years before filing for divorce. In that case, you can show that you and your spouse enjoyed a higher standard of living or could acquire community assets because of your education. Consulting an experienced divorce attorney is essential, especially when your divorce involves student loans.
Reimbursement for Community Funds Used to Pay Student Loan Debt
Now that we know how the courts will assign student loan debt during a divorce, another question arises. What about the marital funds used to pay the student loan debt during the marriage?
In general, the rule is that the spouse who took out the loans should have to pay back the money used from marital funds to pay down the loans or pay for education outright. The reimbursed money will be split 50/50 between each spouse.
This is subject to the exceptions mentioned above. That means the court will look at whether the community financially benefited from the education, if both spouses received a benefit from the education, and how the educational benefits affect spousal support amounts.
Turn to Azemika & Azemika, Bakersfield Divorce Attorneys
Divorce is never easy, and the process can become even more complicated when student loans are thrown into the mix. Navigating the intricacies of community property, reimbursement claims, and spousal support requires careful consideration and, often, legal guidance.
Understanding how student loans are handled in California is crucial to a fair and equitable resolution. By approaching the issue with transparency, communication, and the assistance of legal professionals, couples can navigate the maze of student loan division and emerge with a clearer path toward their futures.
The expert team of attorneys at Azemika & Azemika has helped numerous divorcing couples in California. We understand how difficult it can be to divide marital property, especially when student loans are involved. We are here to help support you and protect your family, rights, and assets.
Contact us today for a consultation.