Like other marital debts, student loan debts incurred during a marriage are often allocated between the divorcing parties though sometimes not equally.
CBS News recently reported that student loan debt has risen 20 percent between 2011 and 2013. Student loan debt has now surpassed every other form of non-mortgage debt with the total amount being approximately $1.2 trillion. One expert was quoted as saying that the debt load of the average college graduate is about $30,000. About one out of every seven borrowers will default on their loans within three years of graduation. In the division of marital property which accompanies a divorce, both property and debts are divided by the Arkansas courts. Courts are often called upon to divide student loan debts which were incurred during a marriage.
In a recently decided Arkansas case, Adams v. Adams, one of the issues before the court was the proper division of student loan debts incurred during the parties’ marriage. With two exceptions the trial court apportioned the student loans by “allocating each party’s own student loans to themselves.” The two remaining student loans totaled $71,000. Of that amount, the trial court determined that $16,000 was the “joint marital debt” of both parties. Consequently, the court concluded that the wife should be responsible for paying one-half of the $16,000.
The husband felt that his former wife should be responsible for paying a greater proportion of the student loan debt incurred during the marriage. The trial court had acknowledged that the debt assigned to the husband was greater than the debt assigned to the wife. However, the court found that this “unequal division of debt” was fair and equitable due to the increase in earning potential of the husband thanks to the degrees he obtained with the student loans. It was emphasized that the majority of the student loan debt was incurred to further the education of the husband. On appeal, the Arkansas Court of Appeals upheld the trial court’s decision.
As shown by the decision in Adams, there is no magic one-size-fits-all formula in Arkansas for allocating student loan debts incurred during a marriage. Instead, an Arkansas court will allocate student loan debts based upon what it feels is fair and equitable under the particular and specific circumstances of each individual case.
Deciding for yourself
One potential way to avoid possible liability for a spouse’s student loan debts is to consider a prenuptial agreement that spells out how you and your spouse want to allocate student debt accrued during the marriage should a divorce occur. For those already married, a postnuptial agreement can be executed that specifies how student loan debts incurred during the marriage will be divided upon a divorce. Prenuptial or postnuptial agreements can allow the parties to make decisions for themselves on who will be responsible for student loans rather than leaving the decision to a judge.
Seeking legal advice
The allocation of marital debt upon divorce is often complicated. In fact, arguments over who is responsible for certain marital debts is sometimes more acrimonious than issues pertaining to a division of property. If you are contemplating a divorce, you should contact an Arkansas attorney experienced in handling family law matters as soon as possible. The attorney can sit down with you and map out a solid strategy for attempting to deal marital debts such as student loans.
Keywords: divorce, marital property, student loans