Will Student Loans be Divided in Divorce?

Student loans are one of the most common and durable debts a person may incur, and they often become a point of contention during asset and liability division in divorce proceedings. Understanding how courts address student loan division can offer valuable insight.

What is Marital Property and Debt?

Court discretion is significant when dividing assets and debts during divorce. Property acquired during marriage is presumed to be marital, as stated in Minn. Stat. § 518.003, subd. 3b (2012); Baker v. Baker, 753 N.W.2d 644, 649 (Minn. 2008). Similarly, debts accrued during the marriage are treated as marital debts.

What is Premarital Property and Debt?

Property or debt that was acquired before marriage is presumed to be non-marital (Minn. Stat. § 518.003, subd. 3b). Typically, non-marital assets are retained by the individual post-divorce, while marital properties are divided equitably between parties as per Minn. Stat. § 518.58, subd. 1 (2012).

Student Loans Incurred Before Marriage

Student loans taken on before marriage are typically considered the separate responsibility of the individual who acquired them.

Student Loans Incurred During Marriage

Student loans acquired during marriage are presumed marital and are subject to equitable division, which considers fairness over equality. Factors influencing this decision include:

• Use of Student Loans: Loans used to support the family might be more readily divided as marital debt, whereas loans strictly for personal education might not.

• Financial Circumstances of the Parties: The earning capacity and financial benefits gained from the education play a role in dividing the debt. The party that gained financially from that education, through improved career prospects, could bear more of the cost.

The division of student loans in divorce is complex and dependent on several factors, including how the funds were used and the financial situation of each spouse. It’s essential for divorcing parties to consider these elements carefully while planning their separation.