Are student loans divisible in a North Carolina divorce?

The process of divorcing in North Carolina involves separating resources that people may have combined decades ago. Oftentimes, spouses prioritize major assets like their marital home or their retirement savings as they negotiate terms for their divorces.

However, debts taken on during the marriage will typically also be part of the marital estate that can have a profound impact on the economic reality of each spouse post-divorce. Obviously, shared debts like credit cards and mortgages could be major points of contention. However, the biggest debts that people owe might actually be student loans.

Professionals with advanced degrees and those that go back to school to improve their earning potential often end their educations with tens or hundreds of thousands of dollars in student loan debt. Will someone’s student loans end up as part of the marital estate that they have to divide when they divorce?

Timing is the biggest factor in the division of debt

Student loans will usually only have the name of the person attending an institution of higher education and possibly a co-borrower on the paperwork. However, at least some of the balance could potentially be marital debt that both spouses have a theoretical responsibility to repay.

What usually matters is when they took on those debts. Student loan debts accrued during the marriage are often part of the pool of marital assets and debts. Student loans taken on prior to marriage will typically remain the separate financial obligation of one spouse. If someone refinances the student loans during the marriage, the date they took on the original debt, not the origination date of the new loan, will be the primary determining factor regarding whether the debt is part of the marital estate or not.

Many people resent the idea that they might have partial responsibility for someone else’s education, especially if they will no longer benefit from that education. People can and often do reach amicable settlements regarding debts and property through direct negotiation during North Carolina divorces instead of waiting for a judge to rule on the matter.

Learning more about the property division standards in North Carolina divorces can help people better understand what to anticipate during the process. Seeking legal guidance proactively, therefore, is generally a very good idea.