How Does Divorce Impact Student Loans?

Posted on January 29th, 2020 in Divorce

Going through a divorce is complicated. With the emotional strain you and your family are undergoing along with the complications of spousal support, child custody, and dividing marital assets, it’s a lot to process. But what happens when one of the major strains on your divorce is due to student loan debt? How can divorce impact your student loan payments?

Let’s look at the facts. 1 in 8 divorces occur because of student loans. We know that financial strains can often have a negative impact on a relationship, especially when one spouse had minimal debt from college while the other procured debt larger than a monthly mortgage payment.

When that strain results in a divorce, the root of the problem–debt–will rear its head again. Who is responsible for what amount of debt?

Know the Laws – Student Loans and Divorce

Pennsylvania is an equitable distribution state, meaning that the division of marital property is not a 50-50 split but rather on what is of equitable. In these situations, the states have the final say. 

So, like your material possession, your debt will also be divided based upon the equitable distribution model which takes into account various factors like the length of the marriage, the income of each spouse, etc. 

This is easy to figure out when you and your spouse have an equal amount of student loan debt. But when one has more debt than the other, it becomes complicated. 

Timing Matters

When it comes to dividing marital property, it matters when the assets were acquired. The same goes for student loan debt. 

The misconception is that any debt you acquired before getting married becomes shared once you say “I do.” But in reality, that isn’t the case. 

Legally, student loan debt incurred before the marriage is separate property even if you divorce. The exception would be if a prenuptial agreement states otherwise. 

But let’s say you amass student loan debt after the marriage begins. In some cases, if the spouse with the debt isn’t the main financial provider in the relationship, that spouse may not be the one making the loan payments. 

Factors will come into play from the equitable distribution model as well as how the money from the loan was used (tuition only or for living purposes) and what is that spouses earning potential with the degree obtained. Courts will also look at whosewho’s name the loan is in. If it is solely one spouse, the other spouse may not have to pay anything towards the loans at the time of divorce. But this depends greatly on each couple’s unique situation. 

What happens though, if a couple splits and college-aged children are involved. How will the divorce impact their college debt?

When Parents Divorce – How Student Loans are Affected

Understanding how student financial aid is calculated is a very complicated process that depends in part, on a student’s academic merit when it comes to private aid. But largely, it has everything to do with the child’s parent’s income.

But when parents divorce, this can complicate the financial aid process.

When completing the Free Application for Federal Student Aid (FAFSA), the child will be asked to show the custodial parent’s income. But when custody is shared, the process further complicates. 

There is also the added curveball of stepparents in the picture. FAFSA is wary of people manipulating the system so you may be required to show more income-based documentation when calculating potential aid to be received.  

Divorce is tricky and when student loan debt is added to the equation, it can be unbearable. That’s why you need the support of the Scranton lifetime lawyer. 

Let the Scranton Lifetime Lawyer at Kalinoski Law Offices P.C. help you navigate your future.

Our Scranton family law attorney is available to provide you legal representation and guidance on protecting your assets during a divorce and ensure you are paying the student loan debt that is fair. To arrange a confidential, free initial consultation with a strong family law advocate, contact us online or call (570) 207-4000.

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