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Will I be responsible for my ex’s student loans if we divorce?

On Behalf of | Mar 3, 2023 | Divorce

To ease the financial strain that many Americans felt during the last few years, the federal government in 2020 issued a moratorium on most federal student loan payments. Now, the federal student loan moratorium is set to end later this year, and student loan payments will resume for all.

So, if you divorced during the three years that student loan payments were paused, you likely want to know if you will be responsible for your ex’s student loans once payments resume.

Property division and student loans

California is a community property state, so any debts you and your spouse incurred either together or individually while married are split evenly between you if you divorce. However, student loans are considered separate property in California, even if they are taken out while you are married, except under certain circumstances.

Generally, separate debts are assigned to the person whose name is on them. But when it comes to student loans, it is presumed that if more than 10 years have passed since the loan was taken out, the non-student spouse has benefited from the enhanced earning capacity of the student spouse. Thus, the non-student spouse might be assigned a portion of the student loan debt in a divorce.

Pitfalls to watch out for

There are two other pitfalls to watch out for regarding student loan debt and divorce.

One is if you co-signed the student loan with your spouse. Your name is on the debt, and divorce will not erase this fact. You might still be responsible for the loan in the eyes of the lender, even if it is assigned to your spouse.

A second pitfall is if you and your spouse combined your student loan debts in a joint consolidation loan. This option was offered by the federal government from the 1990s to 2005.

The federal government never developed a means for detangling joint consolidation loans into their separate balances. So, in general, each spouse’s name stays on the loan until it is satisfied, and thus, you might be responsible for the debt post-divorce.

What is fair?

No one wants to be unfairly burdened with debt post-divorce. California courts recognize that fairness dictates that with some exceptions, student loans belong to the student who took them out, unless the other spouse benefited financially from the loan.