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How Divorce Affects Your Student Loan Debt

how divorce affects student loans

Student loan debt is a common part of life in America, with about 1 in 8 Americans carrying some sort of debt after college. It should come as no surprise, then, that it is a frequent issue among divorcing couples. There’s no quick answer as to what happens to your student debt when you divorce, so it’s important to discuss the possibilities with an experienced attorney and find out what your responsibilities are.

Have questions about your student debt and other financial obligations after a Virginia divorce? We can help. Call Buck, Toscano & Terezkerz at (434) 977-7977 to set up a meeting now.

Federal Student Loans

Before you start considering your options, make sure you know the breakdown of your student loans. Private and federal loans are handled differently. If you have private student loans, your payments will likely remain the same regardless of your circumstances. However, federal student loans have a variety of repayment options, typically based on your taxable income. Once you divorce and you file as single, you may be able to apply for an income-based repayment plan that drops your monthly payment down.

Debt Acquired Prior to the Marriage

You’ll also need to consider when you signed for the student loans. If you accrued them before getting married, they are typically considered separate debt. As a result, those loans will probably stay with you after the divorce. There may be room for negotiation in some situations, however, such as if your partner paid the loans throughout your marriage and you will be financially unable to do so yourself when you become single.

Debt Acquired After the Marriage

You may be able to get more assistance if you signed for the student loans when you were married. Any debt accrued during the marriage is generally considered joint debt, so your spouse might be liable for it as well. The courts are likely to assume that you took on the debt to further your education and improve your family’s financial situation, which would mean both parties are responsible for paying it back. If you choose to stand on this position, be aware that your spouse may argue against it. You may need to be open to negotiations if this is an important part of your divorce settlement.

Don’t Forget Cosigned Loans

Cosigned student loans can further complicate your situation. Perhaps you took out student loans while married but could not qualify for them on your own. If your spouse cosigned them, those loans are just as much their responsibility as they are yours. Anything that happens to the loans affects their credit score just as much as it impacts yours. This may give you some leverage when it comes time to negotiate.

Consider the Tax Ramifications

Regardless of what outcome you hope for in your negotiations, don’t forget to think about how your tax situation may change after the divorce. Currently, interest paid on student loans is tax deductible up to $2,500 per year. Depending on your income and tax bracket, this deduction (or lack of it) might make a difference on the amount of tax you will owe. You’ll want to review your taxes to ensure that your agreement does not cost you too much when it comes time to file your return.

Equitable Distribution in Virginia

Remember that Virginia is a state that divides debts and assets equitably. This means that debt is divvied up in a way that respects both parties’ use of the debt, ability to pay, and other factors. If you make $10,000 per year and your spouse makes $150,000 per year, for example, they are obviously in a better position to pay the student loans you acquired during the marriage. This is something the court will consider as they try to determine a fair and equitable way to divide the marital estate.

Choose Buck, Toscano & Terezkerz for Your Family Law Needs in Virginia

Divorce often comes with more questions than answers, and it can be overwhelming to juggle the emotional, legal, and financial aspects of this difficult time. Our team is here to guide you through and help you prepare for life on the other side. Let’s set up a time to talk about your options. Reach out to us online or give us a call at (434) 977-7977 to get started.

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