Dividing student loans in a divorce

On Behalf of | Jun 11, 2020 | Divorce

When people get a divorce, in addition to dividing shared property, they may also have debts that one or both people will be responsible for. The average age for a first divorce is 30, and this means that many people who are getting a divorce might have student loans. Since Kentucky is not a community property state, if the loan is in just one person’s name, that person will be responsible for its repayment. However, student loans are not always straightforward.

For example, while federal student loans do not require a cosigner, a private student loan may. If a spouse is a cosigner, they may both be held responsible for the student loan. If both people had student loans, they might have consolidated them, and in this case, they would both be responsible for the debt if both their names were on it. However, this type of consolidation has not been permitted for more than a decade, so it is less likely that this would be the case.

People who are struggling to pay their own or a spouse’s student loans after divorce have a few options. If there are multiple loans, consolidating them may help. It may be possible to refinance the loan, qualify for an income-based repayment plan, to get a forbearance or to have the loans deferred.

Debt can be difficult to deal with in a divorce because even if there is a debt that both are responsible for, such as a credit card debt if the debt is only in one person’s name, creditors will pursue that person regardless of what the divorce asset division agreement says. People in this situation may want to discuss their options with an attorney. For example, it may be possible to shift part of the debt into the other person’s name.