In today's society, it's very common for individuals to have high amounts of student loan debt. With student loans often being paid back over a decade or multiple decades, it is also common for the issue of student loan debt to come up in the divorce process. How is student loan debt divided? Is it split down the middle, or does it strictly remain with the spouse whose education incurred the debt? The Wall Street Journal delved into this topic in a recent article. As mentioned by WSJ, student loan debt works just like any other debt in divorce in that the amount incurred before the marriage is considered "separate" property/debt and therefore sticks with the spouse who borrowed it.
But what happens if the student spouse incurred the student loan debt during the marriage? If this is the case, the student debt may be considered marital debt, meaning that it is fair game for division. Marital property in Pennsylvania is divided using "equitable distribution," meaning the court divides the property or debt according to what it deems "fair" rather than what is equal. In order to determine how the debt will be divided, or whether it will be divided at all, the court will need to take various factors into consideration. For student loan debt, some of these factors may include the following:
- Each spouse's income level
- The student spouse's ability to repay the debt alone
- The extent to which non-student spouse supported the student spouse through actions, such as by holding off on his or her own education, taking on extra responsibilities, etc.
- The extent to which the non-student spouse benefited from the student spouse's education or degree
The court may choose have leave just one spouse with the obligation of repayment, or the obligation may be divided between both spouses—even though the loan is only in one person's name. If student loan debt was addressed in a prenuptial agreement, the terms of that agreement will determine how the debt is divided.
To see how much relevance student loan debt has in our lives today, you simply have to look at the numbers. WSJ cites data from College Access and Success that shows that the average amount of student loan debt for those who graduated with bachelor's degrees in 2012 was $29,400. College graduates may be facing even higher balances if they went to more expensive universities or if they obtained additional degrees. The WSJ article also included a breakdown of the distribution of student loan balances (information from the Federal Reserve Bank of New York Consumer Credit Panel/Equifax). Through the fourth quarter of 2012, the loan balances were distributed as follows:
Student Loan Debt Balances
- 39.8%—$1-10,000
- 29.84%—$10,000-25,000
- 17.68%—$25,000-50,000
- 8.99%—$50,000-100,000
- 2.17%—$100,000-150,000
- 0.88%—$150,000-200,000
- 0.56%—$200,000
Just like property division, debt division is a very important issue that needs to be fully addressed in the divorce process. At Cairns Law Offices, we specifically handle no-fault, uncontested divorce. If you and your spouse need help drawing up a debt division agreement for this type of divorce, our Pennsylvania uncontested divorce lawyer can provide assistance. Contact our firm so we can provide you with a free consultation!
