What Happens to Student Loan Debt in a Divorce?

About 43 million Americans currently have outstanding federal student loan debt, or about 13% of the population. It stands to reason, then, that a significant portion of individuals going through divorce have student loan debt that will need to be dealt with. While all marital assets and debts generally are divided equally upon divorce, student loan debt is treated a little bit differently from other types of debt in California. If student loan debt is an issue in your marriage, our Stockton divorce attorneys can help you determine how it will be handled in your divorce. 

Separate Property vs. Community Property

California is a community property jurisdiction, meaning that separate property remains the property of each individual spouse, but community property is divided 50/50 upon divorce. Generally, separate property refers to property each spouse owned before the marriage and brought into it, while community property is property that either spouse acquired during the marriage. The same 50/50 division rule applies to community debts as well as community property, meaning that each spouse will be responsible for 50% of the debts incurred during the marriage. 

How Student Loan Debt Is Divided in California 

If debts incurred during the marriage are divided equally upon divorce, that must mean that student loan debt is divided equally as well, right? Not exactly. Under California Family Code Section 2641, “loans incurred for education or training” (i.e., student loans), generally are treated as separate debt, regardless of whether the loans were taken out before or during the marriage. 

However, there are a few exceptions. California family law courts divide student loan debt upon divorce if one or more of the following are true: 

1. The community (i.e., the marriage) substantially benefited from the education, training, or loan incurred
2. The education or training received by one party is offset by the education or training received by the other party for whom community contributions were made
3. The education or training enables the party receiving the education or training to engage in gainful employment that substantially reduces that party’s need for alimony

Determining Whether the Community Benefited From the Loans

When determining whether the community benefited from the student loans, the court is guided by two rebuttable presumptions. If the student loans were incurred less than 10 years before the divorce, the court assumes that the community did not benefit from them, and the debt will be assigned to the spouse who incurred them. However, if the student loans were incurred more than 10 years before the divorce, the court assumes that the community did benefit from them, and the debt will be divided between the spouses. Both of these presumptions are rebuttable with evidence to the contrary. 

Talk to a Stockton Divorce Attorney About Your Student Loan Debt 

Dividing student loan debt (or not) in a divorce can be tricky, and rebutting the standard presumptions requires extensive evidence and careful arguments. For more information about handling your student loan debt in a divorce, please contact a Stockton divorce attorney at McKinley, Conger, Jolley & Galarneau by using our online form or calling us at 209-477-8171.