Paying for college or university often means turning to private or federal student aid for assistance. But higher education isn’t cheap, and a school loan can often be tens of thousands of dollars. According to U.S. News, in 2020, college graduates had an average of about $30,000 in school loan debt, a 20% increase from just a decade prior.
Of course, that student loan must be repaid. In most situations, the person paying back the loan is the one who took it out.
Yet, questions and confusions may arise when a balance remains on the loan and the borrower is getting a divorce. Specifically, you might be wondering whether you are responsible for paying your ex-spouse’s student debts even though you are not on the loan or did not use the aid to fund your schooling.
In this blog, we’ll discuss the situations in which your ex-spouse’s debt might be equitably divided in your divorce. Because we cannot cover all the nuances of these circumstances, our Dayton, OH, team at L. Patrick Mulligan & Associates, LLC invite you to discuss your case with us and learn how we can seek just solutions in your divorce.
Contact us at (937) 685-7006 today.
What Are Marital and Separate Property?
Before taking a look at the division of student loan debt, let’s first examine how any property, assets, and debts are classified in an Ohio divorce.
The primary consideration in asset division is whether the item is considered marital or separate property. Marital property is anything that either spouse acquired during the marriage.
It could include items such as:
- Homes,
- Personal property,
- Bank accounts,
- Retirement benefits, and
- Debts.
Some property or debts obtained during a marriage might have been acquired by only one person. For instance, your spouse may have taken out school loans in their name alone. Still, regardless of whose name’s on the debt, Ohio considers both spouses to have equally contributed to acquiring marital property (Ohio Revised Code § 3105.171). Essentially, one spouse’s debt belongs to both parties.
On the flip side of things, we have separate property. As you might assume, this is anything that either spouse acquired before the marriage. However, some exceptions exist. Certain assets might be considered separate property if they were acquired during the marriage. But these exceptions don’t generally apply to student loan debt.
Are Student Loans Marital or Separate Property?
The next question you might have is whether your spouse’s student loans are marital or separate property. As alluded to in the previous section, it could be either.
Your spouse’s student loans might be considered marital property if they took them out while you were married. Also, as mentioned earlier, even if the loan is only in your spouse’s name, you might still be responsible for paying back a portion of it after your divorce. Technically, you and your spouse could have both benefited from the loan, as furthering their education might have led to promotions and increased income.
Conversely, if your spouse took out the student loan before your marriage, it would be separate property. Therefore, your spouse may solely be responsible for repaying the loan.
How Is Student Loan Debt Divided in an Ohio Divorce?
Like other assets, student loan debts are divided based on several factors.
These factors include, but are not limited to:
- The duration of the marriage,
- The assets and liabilities of each spouse,
- The tax consequences of property division, and
- The cost to sell property.
Ohio is an equitable distribution state. This means that a judge will divide property and debts equally. In some cases, that might result in a 50/50 split of the student loan debt. But not always.
The judge might believe that dividing property or debts straight down the middle would be unfair to one party or the other. In that situation, they will divide assets and debts based on what would be equitable. This could mean that one spouse is responsible for a greater share of the debt. But any deficits or benefits experienced by either spouse because of the way the student loan is split must be made up with the division of other property.
Call an Experienced Family Law Lawyer
Divorces can be complicated and emotionally challenging, especially when it comes to dividing certain items that can substantially impact either party’s finances. Therefore, if your spouse has student loan debt or any other assets that must be split as part of your divorce, seek assistance from an attorney who knows how to handle the complexities of your case.
At L. Patrick Mulligan & Associates, LLC, our team has over 50 years of combined experience and genuinely cares about helping people through tough situations. We can fully examine the property and debts that must be considered in your case to seek a favorable resolution.
Schedule a consultation in Dayton, OH, by calling (937) 685-7006 or submitting an online contact form today.