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What Happens to Student Loan Debt During a Divorce?

Judith Trentman Wilson, Attorney at Law, P.C. June 30, 2021

Today, individuals in Illinois, Florida, and elsewhere bring much with them into a marriage. This goes beyond furniture and pets. Because more and more individuals decide to not marry young, it is more likely that one or both spouses will enter a union with student debt. This debt is assumed by many across the nation, so it is likely that this debt will enter the marriage and could remain during a divorce. Thus, it is important for spouses to consider what might happen to their student debt in the event of a divorce.

Student Loan Debt

In most states, including Illinois and Florida, the equitable division will apply. This means that the judge will decide who will be responsible for repaying the student loans. Various factors will be assessed in order to determine if one or both spouses are responsible for this debt. This includes when the loan was taken out, the amount of the loan, what the loan was primarily used for, such as tuition or living expenses, how much each spouse has contributed to that debt and other similar factors.

Divorce’s Impact on Student Loan Debt

There are a few factors to keep in mind when addressing student loan debt during a divorce. For example, if a spouse co-signed on the loan, he or she will still be liable after the divorce. It is possible to get a co-signer release, but it is not always an option. The best way to address this would be to refinance the loan under the spouse that is financially responsible for the loan.

Another factor is to consider the monthly payments owed. These are typically based on the joint income of the spouses. When a couple divorces, it is likely that it will be based on the income of the individual making the payments. Thus, it is likely that these payments will go down. Finally, if a couple has a prenuptial or postnuptial agreement, it is important to understand that this document will override state laws. Thus, the terms in the marital document will outline how student loan debt will be handled in the event of a divorce.

The division of property during the dissolution of a marriage can be a challenging process. Not only is it emotional, but it can also be a complex process when assessing all the assets and debts to address in the process. Thus, it is important that one considers his or her financial and legal rights when moving forward with a divorce and the division of property.