Student Loans and Divorce

Posted on May 8, 2017 by Katie Carter

Student loans are a reality of the world these days and, if you’ve got them, you’re definitely not alone. (In fact, you’re preaching to the choir.) In fact, these days, more people have student loans than don’t have them, and the average amount of debt each person carries is greater than ever before. It’s pretty staggering, in some cases, how much loan debt one person can carry.
We can debate the ethics of lending so much money to students pursuing careers that will ultimately leave them unable to pay it back another day, but student loans are also an issue that we see come up in divorce cases fairly frequently. Because student loans these days often don’t just go towards tuition, fees, and college related expenses, student loans are sometimes divided in divorce.
Student loans can be totally different, though, depending on the circumstances involved, and they aren’t always divisible in divorce.
When assets and liabilities are divided in divorce, they’re divided based on how they are classified as property under Virginia law.

How is property classified under Virginia law?

There are three different types of property under Virginia law: separate, marital, and hybrid.

Separate Property

Separate property is anything that was earned, purchased, or acquired BEFORE the marriage, or anything acquired before or during the marriage that was a gift or inheritance of one party only (unless it was a gift from the other spouse).

Marital Property

Marital property is anything that was earned, purchased, or acquired during the marriage, regardless of title. (So it doesn’t matter whether the car or the house was purchased in the name of one spouse or both; it’s marital by virtue of the fact that it was purchased during the marriage.)

Hybrid Property

Hybrid property is part marital and part separate. A good example of a hybrid asset would be a house. If it was purchased before the marriage, but then after the marriage the couple made payments on the mortgage out of marital funds, the house is part marital and part separate property.

When your student loans came before marriage

If you went to school before you got married, no matter what you used your student loans for, they’re not going to be divisible in divorce. That’s because then they would be classified as the separate property of the spouse to whom they belong.
Separate property, by it’s very nature, isn’t divisible in divorce. In divorce, you’re only responsible for a portion of the debts that were undertaken during the marriage; you can’t be held accountable for debts that were undertaken by your spouse before you got together.
On the flip side, though, you can’t take advantage of the good things he did prior to the marriage either. Any retirement he earned prior to marriage, as well as appreciation from any other investments or any other property he purchased will be his separately after divorce. Anything either of you brought in to the marriage will go with you when you leave it—and that includes student loan debt.

When your student loans came after marriage

After marriage, though, there’s a different analysis entirely when it comes to student loans. At that point, it becomes necessary to look at what the student loans paid for.
When your student loans were used strictly for college tuition, books, and other educated related expenses, they’re almost certainly not divisible in divorce. Those things really didn’t benefit the marriage, so they’re not going to be divided.
There are things that stem from your education that might be divisible in divorce, though. To the extent that his schooling (or yours, whatever the case may be) allowed him to work a job that earned more money, he could be required to pay spousal support. The analysis for whether spousal support is payable is fairly complicated, and outside of the scope of this article, so if you want to know more, click here.
Again, when we look at property division in divorce, we’re looking specifically at what took place during the marriage. We’re looking at the benefit that, in this case, his schooling (or yours) provided to the marriage, which can impact how property is divided, how support is awarded, and how child support is calculated, among other things.
Chances are, though, that if he (or you) hasn’t finished your degree program or hasn’t yet secured employment at the time that the divorce is being processed, there may be no measurable benefit of the education to the marriage that can be divided in divorce. The court will look mostly at what was earned during the marriage, not what one party might go on to earn after the marriage, even if the other spouse’s support during that time allowed them to achieve a more lucrative position.

When your student loans came after marriage

Just because your student loans were incurred after the marriage doesn’t necessarily mean that they’re divisible in divorce – but that’s definitely a start. Before the marriage, you stand virtually no chance of having him be required to pay any portion of your loans at all.
After marriage, the court will likely look at the purpose that the loans served. To the extent that they went to your (or his) tuition or fees, they probably won’t be divided; you’ll likely be responsible for the total repayment of this amount.
To the extent, though, that your loans went to pay for living expenses, it’s definitely possible that they could be divided in the divorce. You’ll want to look back through your loan paperwork to see how much of your loans went to each category of expense and you’ll probably want to do what you can to work backward in time and trace how you spent the money that was allocated to you for living expenses. Did you use it for rent? Groceries? To the extent that you can, you’ll want to trace it. To the extent that you can’t, you’ll want to offer evidence of your expenses during that time, and whether your loans were needed to contribute to the maintenance of the family during that time.
It’s not guaranteed, but it’s worth a shot. Of course, like anything else, a lot depends on how you choose to move your divorce forward. In a separation agreement case, you can get whatever you get the other side to agree to do—and that could include splitting the entirety of your student loans, if he is willing to sign an agreement obligating him to that level. If he won’t agree, you may have no choice other than to either accept that he won’t be held responsible for any portion of your student loans, or else take it to court and let a judge decide how the debt will be allocated between the two of you.
Student loans are an issue that is definitely on the rise. If student loans are an issue in your case, this should give you some general guidelines about what to expect. For more information or to schedule a consultation with one of our licensed and experienced Virginia divorce attorneys, give our office a call at (757) 425-5200.