What Happens to Student Loans in a North Carolina Divorce?

Written by Jonathan Breeden

January 4, 2019

When your mind is focused on divorce issues such as asset division, spousal support, and care for minor children, there’s one question you may not have considered: what happens to student loans in a divorce? There’s no clear answer, which is why this type of debt can lead to bitter, prolonged disputes between the parties.

At Breeden Law Office, we understand that student loans and other debts can be just as hotly-contested as the division of assets. However, we also know the applicable laws and factors that a court will consider when deciding the issue. North Carolina divorce lawyer Jonathan Breeden has years of experience representing clients in divorce cases, and he has helped parties come to agreements on debt-related disputes. However, he also has the litigation skills to advocate on your behalf in court.

To schedule a consultation of your case, contact us today at (919) 661-4970.

North Carolina Law on Marital Debt

Before getting to the specifics on what happens to student loans in a divorce, you should become familiar with how state law treats assets and debts in a divorce case. North Carolina requires an “equitable distribution” of all marital property. In the absence of an agreement on asset distribution, a court will decide by:

  • Determining what assets are part of the marital estate, which would include all property spouses acquired during the marriage, individually or jointly
  • Dividing the marital estate in a way that’s fair and equitable, which may or may not be exactly equal

The same law that applies to the division of marital property also applies to debts acquired during the marriage. With a mortgage, auto loan, credit cards, and other financial obligations, the division of debt is rather straightforward. Student loans, however, are less clear-cut.

Factors Affecting What Happens to Student Loans in a Divorce

It would seem that taking a student loan out during the marriage would automatically make it a marital debt for both spouses, subject to equitable division. The question of what happens to student loans in a divorce raises additional inquiries:

How Were Loan Proceeds Applied?

Many forms of student loans aren’t earmarked for tuition, books, and other supplies. The proceeds can be used for housing and other living expenses, which benefits both parties. In such a situation, the student loan may be considered marital debt.

Did the Party Who Received the Student Loan Earn Their Credentials?

A degree or professional license has value for the person that earned it, so it’s viewed as separate property in a North Carolina divorce. As the credential isn’t divided equitably between the parties, the law may treat the loan behind it as separate property.

How Long Did the Marriage Last After Procuring the Loan and Earning the Degree?

Generally, the student loan is more likely to be considered marital property if the marriage lasted for a considerable time afterward. The idea is that both parties had time to enjoy the results of the degree that was supported by taking out the student loan. Therefore, they should also share in the debt.

Ultimately, the determination of student loan as marital or separate property involves balancing all of the answers to these questions. The decision may also depend on other factors that may be relevant, such as the distribution of other assets and alimony.

If You Have Questions About Student Loan Debt and Divorce, Call Us Today

Student loans are often necessary for some people to afford their education. If you took out such a loan during your marriage and are now getting divorced, you may be wondering what happens to this debt. To learn about whether your loans are considered marital or separate property, you need the skilled help of a North Carolina divorce lawyer. Attorney Jonathan Breeden has been helping divorcing spouses for years. Let him assist you. To schedule a case consultation, contact Breeden Law Office at (919) 661-4970.


Divorce In North Carolina: What You Need To Know

A book by Jonathan Breeden