What Happens to Our Student Loans if We Get Divorced?

 Posted on November 15, 2021 in Divorce

The Biden Administration recently announced modifications to its Student Loan Forgiveness program for borrowers like teachers and police officers who have spent at least 10 years working in public service, making it easier to apply and get approval for loan forgiveness. But these changes impact a relatively small percentage of borrowers and leave the vast majority of student loans untouched.

Student loan debt has an outsized presence in so many young Americans’ lives, and it affects everything from their ability to buy a home to their willingness to take entrepreneurial risks. Worse, when young couples get married and then get divorced, student loans can be a headache in the marital property division process. Understanding how student loans are divided in a divorce, and whether your or your spouse’s student loans are likely to be considered marital property, is essential for couples considering divorce in Illinois. 

Are My Student Loans Marital Property? 

Illinois is an equitable distribution state, meaning courts divde marital property in a way that is fair rather than exactly equal. If both spouses have a relatively equal amount of student loans, the division is usually simple: Each spouse generally takes responsibility for their own student loans and they go their separate ways. But when one spouse has more loans than the other, this can be more complex and often hinges on whether the student loans are considered marital property. 

Whether any debt is considered marital property depends on when it was accumulated, how it was used, and whether it benefitted the marriage. When determining whether student loans may be marital property, it is helpful to consider the following: 

• Whose name the debt is under and whether one spouse co-signed on the other spouse’s loans

• How the student loans were used - i.e., did a spouse pay exclusively for their education, or did both spouses live on the funds? 

• Which spouse has been making payments on the loans 

• How the education paid for with student loans affected that spouse’s career and their contributions to the marriage 

• How long the marriage lasted

• Whether the student loan debt was taken out before getting married

Generally, student loans acquired by either spouse before getting married remain the individual responsibility of the spouse to whom they belong. However, if assigning the student loan debt exclusively to its owner would be grossly unfair, courts can require both parties to pay for it. For example, if a wife took out student loans to earn her degree, but then spent many years working at home to raise the children and care for the home, the husband may be assigned a portion of her debt or be required to give the wife a substantial portion of the marital assets to help pay for her loans. 

Contact a Wheaton, IL Marital Asset Division Attorney

During your divorce, it is important to have the help of an experienced and knowledgeable Dupage County divorce attorney. At The Stogsdill Law Firm, P.C., we have assisted many couples who have student debt achieve an equitable division of their marital assets and debt. We can help you understand what to expect and will advocate passionately on your behalf throughout your entire divorce. To find out how we can help you, schedule an initial consultation with our offices. Call us at 630-462-9500. 

Sources:

https://www.reuters.com/world/us/biden-administration-expands-student-loan-forgiveness-eligibility-2021-10-06/ 

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?DocName=075000050HPt%2E+V&ActID=2086&ChapterID=59&SeqStart=6200000&SeqEnd=8675000