Study Estimates 13% of Divorces Caused by Student Loans

Student Loans and Divorce

Student loan debt, now at a record high of $1.5 trillion, has become a marriage killer. According to a June 2018 survey by Student Loan Hero and reported by CNBC, more than a third of borrowers said college loans and other money factors contributed to their divorce, and 13 percent of divorcees blame student loans specifically for ending their relationship.

This is not surprising when you consider that the average outstanding student loan balance is $34,144, up 62 percent over the last decade, according to a report by Experian. And the percentage of borrowers who owe $50,000 or more has tripled over the same time period. This kind of debt puts tremendous pressure on young couples who are struggling to get established in their careers and wish to buy a home or start a family.

Not only do student loans contribute to divorce, they can make the process of dividing assets and debts more complicated.  Who owns the debt from the loan when couples split, and how is it going to be paid off in the future?

Divorce, dividing debts and property, and other family law issues are emotionally charged issues that are life-changing for everyone involved. To avoid making costly mistakes, it makes sense to consult an experienced family law attorney to help you through this difficult time.

The seasoned and compassionate Illinois family law attorneys at Wolfe & Stec, Ltd. work to clarify and resolve the issues you are facing in the most effective and efficient manner.  We offer a free consultation to help you find the best solution for your student loan and other issues, so contact us online or call us today for your free consultation.

Student Loan Debt in Illinois Divorce

In an Illinois divorce, the courts will look at whether a couple’s property and debts are considered marital, or whether they belong to one spouse separately.  Since Illinois is an equitable distribution state, marital property and debts may not be divided equally.  Instead, a judge will divide them in what is considered to be a fair and just manner after evaluating the individual circumstances.

Student loan debt may have occurred previous to the marriage, or it may have occurred during the marriage. Since the benefit of that debt — the person’s education — belongs to the individual and can’t ever be taken away, usually the debt is considered separate debt. However, if the money for education was borrowed during the marriage, the situation becomes more complicated.

Debts taken on during the marriage are generally considered part of the marital estate and may be divided in various ways, depending on whether one or both spouses benefited from the loan proceeds. Factors that may be used to determine whether the student loan debt is a part of the marital estate include:

  • When the debt was incurred
  • How the money was used and who benefited from it, if a degree was obtained
  • Tax implications related to the debt
  • The duration of the marriage
  • The contribution of a spouse as a homemaker
  • The value of the assets of each spouse and their relevant economic circumstances
  • The age, health, occupation, skills, employability, earning power and needs of each spouse.

Receiving Compensation

Different courts may divide student loan debts differently and provide compensation to one spouse for certain circumstances. Possibilities include:

  • Student loan monthly repayments may be included in spousal maintenance.
  • An alimony recipient could shift some of the loan debt to an ex in exchange for giving up taxable spousal support.
  • Short-term spousal support may be provided so an ex with heavy student debt can pay off their loans.
  • A spouse who was a homemaker or worked while the other spouse earned a degree to earn more money in the future, or one who helped pay down the other person’s loan, may also be compensated.

Contact Us For Help

Laws relating to division of student debt can be complicated, and making a mistake can be costly. Fortunately, there is help available, and you may find comfort in knowing a lawyer is on your side. The seasoned Illinois family law attorneys at Wolfe & Stec, Ltd.,  handle all divorce cases with sensitivity, respect, and discretion.

At Wolfe & Stec, Ltd., we made our reputation one client at a time, and we put every ounce of our ability into every case. There are no ready-made solutions in divorce and family law – every case needs to be considered on its own merit. Our lawyers take the time to delve deeply into each situation and to understand your goals and concerns. Then we develop a legal strategy designed to achieve those objectives and allow you to keep as many marital assets as possible.

There is no charge for the first consultation, and we are happy to schedule appointments at your convenience. Delaying can only complicate your situation and make matters worse. Contact us online or call us today for your free consultation.

Attorney Natalie Stec

Natalie M. Stec, born and raised in Illinois, and earned her Bachelor of Science from the University of Illinois at Urbana-Champaign. Her practice has been concentrated in significant pre and post decree marital and family law cases; including custody, visitation, support, and paternity matters. She has important criminal defense experience in both misdemeanor and felony cases. She is a very dedicated and passionate litigator. [ Attorney Bio ]