Is Student Loan Debt Considered Marital Debt?

Courthouse columns

“Marital debt” is debt that is:

  • incurred by one or both parties during the marriage and prior to the date of separation;
  • owed on the date of separation; and
  • incurred for the joint benefit of the parties.

When parties separate and one party owes debt on student loans, it is not unusual for the parties to disagree as to whether the student loan debt is the sole and separate debt of the party who incurred it, or marital debt that is subject to division between the parties as part of the equitable distribution process. Whether student loan debt is classified as marital debt or separate debt will depend on whether the party who incurred the debt can carry his/her burden of proving that the debt was incurred for the joint benefit of the parties. For example, in Warren v. Warren, 773 S.E.2d 135 (N.C. App., 2015), the Court of Appeals affirmed the trial court’s ruling that the plaintiff’s student loan debt was marital debt. In the Warren case, the plaintiff /wife was able to show that some of the funds from her student loans were used to pay the family’s living expenses, and the marriage subsequently benefited from her higher salary.

No one can predict what a judge will do in any specific case. However, this legal precedent suggests that when a party uses student loans to obtain education or training that results in increased employment opportunities and higher income that benefits both parties, there is a strong argument that can be made that the student loan debt should be classified as marital debt. A key consideration is whether the marriage lasted long enough after the student loan debt was incurred for both parties to substantially benefit from the education or higher earnings.

If the student loan debt was incurred by a party prior to the marriage or after the date of separation, then the debt is the separate debt of the party who incurred the indebtedness.

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