Who is responsible for student loan debt when a married couple divorces? The answer depends on where the couple lives and when the student loan debt was incurred. For property distribution purposes in a divorce, a state is either classified as a community property state or an equitable distribution state.
Community Property States
There are only nine community property states—Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, each spouse is entitled to an equal 50-50 share of the couple’s marital property. Marital property is any property (including debt) acquired by one or both of the spouses during marriage. So, in a community property state, student loans accrued by one spouse during the marriage are considered marital property, and thus, are the responsibility of both spouses in a divorce. Conversely, student loans accrued by one spouse before the marriage are not marital property, and thus, remain that spouse’s sole responsibility in a divorce.
Equitable Distribution States (Indiana)
Most states, such as Indiana, are equitable distribution states. Student loan debt accrued by one spouse before the marriage is likely to be that spouse’s sole responsibility in the divorce. However, for student loans accrued during the marriage, the answer is more complicated. In an equitable division state, each spouse is entitled to an “equitable” portion of the marital property. An equitable division begins with a 50-50 presumption; however, a court may deviate from this presumption if it determines a 50-50 split is not “just and reasonable.”
To determine what is just and reasonable, a court will consider a variety of factors. For example, factors considered in Indiana include: when the property was acquired, how the property was acquired, the economic circumstances of each spouse at the time of the dissolution, the conduct of each spouse during the marriage and dissolution, and the earnings or earning ability of each spouse. So, the court starts with a presumption of a 50-50 split but weighs many factors that could shift that split one way or another (for example to a 60-40 split).
In sum, student loan debt accrued by one spouse during the marriage may or may not be that spouse’s responsibility in the divorce. If you or your spouse have student loan debt and you have questions about how that debt should be classified in a divorce, contact McNeelyLaw’s family law attorneys today.
This McNeelyLaw LLP publication should not be construed as legal advice or legal opinion of any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer on any specific legal questions you may have concerning your situation.