It should come as no surprise that more and more people are going to college. According to the Education Data Initiative (EDI), 40% of 18-24 year olds attend at least some kind of post-high school education. And with higher enrollment rates comes more and more student loan debt, and North Carolina is no exception. Also according to the EDI, borrowers in North Carolina borrow an average of $38,134 to attend college, and the number is even higher for advanced degrees such as law, medical and graduate programs.
These ever-increasing student loans are carried into, or taken out during, marriage. One of the more common questions family law attorneys get is “Am I responsible for my husband or wife’s student loans if we divorce?”
The answer can get pretty complicated. When a couple separates with the intent of divorcing, either spouse can petition the court to divide their finances via a legal mechanism known as “equitable distribution.”
In equitable distribution, assets and debts are either “marital property” or “separate property.” Marital property includes both assets, such as money, real estate, retirement accounts, stocks or vehicles, and liabilities, such as mortgages, car loans, credit card loans and student loans. Separate property is all assets and liabilities acquired by one spouse, in their name only, before the marriage, after the date of separation, or via receipt of a gift or inheritance made to one spouse individually.
So, in the case of student loans, if one spouse incurs their student loans prior to the marriage then the student loans remains their “separate property” and they shall be solely responsible for repayment of the student loan following separation and eventual divorce.
For student loans acquired during the marriage, the presumption in North Carolina is that the parties are jointly and equally responsible for the loan repayment. However, because only one spouse can enjoy the benefits of the student loan (i.e. the degree and/or certification) courts will often divide the loan “unequally” and require the spouse who took out the loan to bear the most or all of the responsibility for repayment. However, this is not guaranteed and can depend on, for example, how much of the student loans were for tuition versus for living expenses.
In the end, while courts start with a presumption of an equal division of the property and debts acquired by two people while they are married is best, that’s not always the case. North Carolina judges are given significant discretion in how to divide up everything acquired during the marriage, including student loans.