According to research, student loan debts may cause problems other than just accumulating massive debt. As is common with financial struggles in general, a heavy student loan debt load can create a lot of stress in a marriage relationship. Researchers have known for years that money problems, such as debt, causes stress in marital relationships. However, the most recent study shows that student debts are more harmful in that regard than other types of financial obligations. The Student Loan Hero study found that 33% of student borrowers believed their divorces were caused by money problems, with 1 out of every 8 students blaming his or her student loans for causing marital issues leading to divorce.
One particular problem with a student loan is that it is usually larger than the average debt. The average student loan is more than $34,000. Some students even have loans equaling $50,000 or more; for advanced and graduate degrees, student debt can reach six figures. Individuals graduating from college without a job may find it extremely difficult to pay back their loans. A married student with plans to buy a house and have children may face insurmountable monetary issues.
Students/former students who are planning to marry should think about their student loan debts before tying the knot. Otherwise, they may find themselves starting off a marriage with a debt burden that could create a lot of resentment with their spouse that will eventually lead to divorce court. Any person who has a large student loan debt, or anyone planning on marrying someone with such a debt, should also think about how that loan will be repaid, and the effects those payments will have on the family budget.
Some couples have choosen to postpone their wedding dates until they reduce or eliminate their debts. However there is no need for that drastic step. Premarital agreements can address issues such as whether debts, including student loans, are/remain separate property, and who is responsible for paying off debts, including student loans, accumulated before or during the marriage.
Student loans acquired prior to marriage are generally separate property. Debt incurred in the name of an individual, whether for student loans, credit cards, or other lines of credit, will generally remain the obligation of that individual post-divorce.
Whether the debt is ultimately treated as one that reduces the value of the marriage’s overall community property estate will depend on when the debt was acquired and how the funds from the loan were used. For those who have or are planning to incur student loan debt during the marriage, it is therefore wise to take care in how you use those loan proceeds. For example, if your betrothed racked up student loan debt prior to marriage, but used the loan proceeds to pay for living expenses after your marriage, you may find yourself obligated to pay off part of that debt. Also, if the degree or expertise obtained using the student loans led to a job that provided a significant boost in earning potential that benefitted both spouses, the debt may be treated as community debt.
If you find that debt in your marriage is causing irreconcilable stress and conflict, you would be wise to consult with a family law attorney early on. There may be strategies you can implement in your family’s financial management that protect both you and protect your community property assets. A consultation with a family law attorney may well protect your relationship as well, and head off a potential path to divorce.
A divorce attorney can provide guidance to help a couple resolve difficult issues, including crafting a Premarital or Postnuptial agreement to address financial matters, as well as finding resources for marriage and financial counseling. If you’d like to explore your options for dealing with student loan debt in your relationship, give Hargrave Family Law a call; we’re here to help.