How Massachusetts views student loans and advanced degrees in divorce cases

How Massachusetts views student loans and advanced degrees in divorce cases

Understanding how divorce may impact student loans.

Financial arguments are a leading predictor of divorce, according to a recent study by researchers at Kansas State University. Perhaps no greater financial difficulty comes in the form of dealing with student loans in a tough economy. Recently student loan debt in the U.S. surpassed $1 trillion, replacing credit card debt as the number one biggest debt source in the country.

Massachusetts is home to some of the most preeminent institutions of higher education in the world. Enrollment also comes at a high cost. Many Massachusetts couples therefore have a significant amount of student loan debt to manage.

When divorcing, debt can become a hotly contested issue. In addition to the couple’s assets, such as bank accounts and the marital home, the couple must also decide who will obtain custody of debt. The parties to the divorce are generally free to negotiate an allocation of debt and assets. For example, one ex-spouse could take on the mortgage in exchange for putting the house solely in his or her name. Or an ex could take on credit card debt in exchange for reduced alimony payments.

Student loans acquired during the marriage

Massachusetts is an equitable distribution state. As such, anything acquired during the marriage may be considered marital property, regardless of whose name the property is in. A judge will attempt to divide marital property fairly, although not necessarily equally, in a contested divorce.

However, property owned by one spouse before the marriage will be considered his or her own. Inheritances, gifts and property designated as separate property in a prenuptial agreement are also not subject to division.

Debts are handled similarly to assets in divorce. This means that student loans acquired by one ex-spouse before the marriage are generally separate property. However, if the student loan was acquired during the marriage it may be considered as marital debt depending on circumstances. If the loan covered only tuition and school fees, for example, a judge is likely to consider that as separate debt. However, if the loan also provided living expenses for the time the spouse spent at school, it may be marital debt. If the student loan debt is marital, a judge will allocate the debt according to what Massachusetts law and individual circumstances warrant.

Value of a professional degree

While it is easy to focus on the sometimes astronomical debt associated with obtaining an advanced degree, that degree also holds monetary value. Professional degrees can bring larger salaries. If a spouse supported the other while he or she went to school, there may be reason to give the supporting spouse some value for that support. This could take several forms, for example through lump sum or periodic alimony payments, by providing the supporting spouse with equal opportunity to pursue a degree or by giving the supporting spouse other valuable property, such as stock options or an ownership interest in a business.

A divorce is as unique as a marriage

Every marriage is different, and when a marriage dissolves it requires taking into account the circumstances and goals of the couple about to split. Massachusetts couples contemplating divorce should speak to an experienced family law attorney to discuss legal options and next steps.

Keywords: Divorce, student loans, division of assets.