Who Is Responsible for Student Loans After a Divorce?

 Posted on August 12, 2020 in Divorce

In the United States, the average outstanding student loan debt for people who attended college is over $30,000. For many, this makes student loans one of their largest sources of debt, perhaps second only to a home mortgage. In a divorce, if you, your spouse, or both of you have student loan debt, it may factor significantly into the settlement negotiations or litigation, since separating couples in Illinois are required to distribute both marital assets and debts. However, it may not always be obvious which spouse will be responsible for the ongoing repayment of these debts.

When Are Student Loans Considered Marital Property?

You might expect that after a divorce, student loan debt will stay with the person whose education the loan paid for, but this is not necessarily the case. If you or your spouse incurred student debt before your marriage, it will likely be considered non-marital property and thus not subject to division. On the other hand, if one or both of you took out a student loan to pursue education during your marriage, any debt remaining on that loan at the time of divorce will likely be deemed marital property, especially if the reason for pursuing higher education was to increase earning potential in a way that would benefit the marriage.

How Is Student Loan Debt Distributed?

Illinois law requires the equitable distribution of marital property in a divorce, meaning that student loan debt will not necessarily be divided in half, but will be distributed fairly according to factors that apply in a case. These may include:

• What the student loan money was used to pay for. For example, using student loans to pay for living expenses can increase the likelihood that they will be considered marital property.

• Whether the spouse co-signed on the loan. Co-signing makes it more likely that both spouses will continue to be responsible for the debt after the divorce.

• Differences in earning potential between spouses. If one spouse earns significantly less than the other, even after furthering their education, the higher-earning spouse may be assigned a greater portion of the debt.

• Division of other assets and debts. Student loan debt distribution may be part of a larger negotiation of the division of all marital assets and debts, in which case one spouse’s obligations may be waived in exchange for willingly ceding other assets.

Contact a DuPage County Divorce Lawyer Today

Student loans are just one of many factors that can impact your finances in a divorce. At Andrew Cores Family Law Group, our attorneys can help you identify all marital assets and debts and work toward a distribution that works for you through either cooperative negotiation or litigation. Contact an experienced Wheaton division of marital debt attorney at 630-871-1002 for a free consultation that can start you on the path toward an agreeable divorce resolution and financial security.

Sources:

https://www.credit.com/personal-finance/average-student-loan-debt/#:~:text=The%20most%20recent%20data%20available,owed%2C%20is%20an%20estimated%20%2432%2C731.

https://www.ilga.gov/legislation/ilcs/documents/075000050k503.htm

https://www.usnews.com/education/blogs/student-loan-ranger/articles/2019-06-12/how-divorce-affects-your-student-loan-debt