What Happens to Student Loans in a Divorce?

Student loans after divorce are not typically treated any differently than they were before the marriage. Most student loans are incurred prior to a couple is legally married, and they remain the sole responsibility of the debt holder during the marriage and after. If the loans happened to be incurred as joint debt during the marriage, then the debt will have to be split once the divorce occurs. 

Independent Student Debt

Most student debt is in the name of a single borrower. Most students are single at the time they begin attending college. That being said, some students will be married upon taking loans; this particularly a possibility with graduate loans. Even though a person is married when he or she is sourcing the loans, though, there is still a possibility the debts will be assigned to only one person - the student. It is rare for a married couple to enter student debt jointly.

Why Student Debt Is Rarely Joint

The main reason it is rare to enter student debt rarely is there is little benefit to doing so. Married couples have joint debt so they can report both of their incomes on the application. This allows them to secure higher limits when needed; joint debt is most common for mortgages when couples will both be contributing to a mortgage and would like their application to reflect this fact. Student loan limits are commonly set based on the cost of tuition or the cost of attending an individual college. They tend to rely less on income, so a married couple will not benefit as much from applying jointly on student debt.

What Happens When Student Debt Is Joint

On the rare occasion two people are both listed on a student debt application, they likely wanted to reflect they would each be equally responsible for paying the debt. Even if both people do make the payments, they will not be treated as equal debt holders unless both names are on the loan. As such, it may be beneficial to list both members of a married couple so they both enjoy the credit rewards. Some couples also believe it is an essential part of marriage to split all debts. These will be the debts that are hardest to deal with in a divorce. 

Splitting Joint Debt

When it comes time to split assets after a divorce, joint debts must also be split. With an item like a home, the debt typically transfers to the individual who will be remaining in the property. This person may need to repay the other partner for the equity he or she is gaining in the house. Obviously, these discussions become complicated and almost always require the advice of a court. Student debt, on the other hand, is much simpler. The individual who benefit from the loans will likely be the one to bear the responsibility of paying them in the future. If the other partner helped with payments along the way, that person will rarely recover any financial contributions after the divorce. 


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