How does student loan debt affect your divorce?

On Behalf of | Dec 20, 2022 | blog, family law |

On average, students attending college in New Jersey owe at least $28,000 in student loan debt. Along with your mortgage and your vehicle loans, student debt may constitute your most serious financial obligation. For divorcing couples, the obvious concern involves determining who becomes responsible for the student loans after the marriage ends.

Equitable distribution of debts

New Jersey courts handle the division of assets and debts between divorcing couples through the equitable distribution principle. In equitable distribution states, courts do not divide equally. Instead, the courts focus on dividing both the assets and debts in a way that is “fair and just.”

The court will examine many factors when trying to divide the debts according to equitable distribution. Some of the most important considerations include:

  • Income of both parties
  • Earning potential
  • Age and health
  • Marital conduct

Marital vs. non-marital debt

During a divorce, courts divide debt into marital or non-marital debt. Marital debt refers to any most debt that occurred during the marriage, while non-marital may refer to a spouse’s financial misuse or debt that occurred prior to the marriage.

If you obtained your student loans during the marriage, your debt will be divided based on equitable distribution laws. If you obtained your loans prior to your marriage, then the courts will hold you responsible for your own student loan debt.

Children’s student loans

Some parents may either take-out a loan or co-sign a loan for their college-age student. If the parent took out a loan during the marriage, the courts consider this a marital debt to be divided according to equitable distribution.

Court’s treatment of student loans

In New Jersey, the courts treat student loans the same way they treat any other debt. The ultimate goal of the courts involves all aspects of the debt’s origin before assigning responsibility for it to either party.