Who Is Responsible for Student-Loan Debt in New York Divorce Proceedings?

When a marriage is ending, unless there is a valid agreement between the parties, it is left up to the judge to determine the financial responsibilities of the parties in what they call in New York equitable distribution. In most cases, this requires the judge to figure out all of the marital assets as well as the marital debts. Student-loan debt is no exception; however, calculating which party is responsible for the payment of student-loan debt may be more complicated that it initially seems.

Graduation CapStudent-Loan Debt Incurred Before the Marriage

As a general rule, student-loan debt that is incurred prior to the marriage is not considered a marital debt, and the party who took the loan out will be solely responsible for the payment of that debt. However, student-loan debt that is incurred during the marriage presents a more difficult situation and often requires the court to apply a multi-faceted test to determine which percentage of the debt, if any, is attributable to the spouse who did not incur the debt.

Student-Loan Debt Incurred During the Marriage

Under New York case law that was decided prior to the 2015-2016 updates to the New York Domestic Relations law student-loan debt may be considered marital debt that is subject to equitable distribution, depending on all of the surrounding circumstances. However, prior to the 2015-2016 update to the New York Domestic Relations law this used to also means that the degree or professional license that was obtained through the procurement of the debt may also be subject to equitable distribution.  The updated Domestic Relations law, however, specifically changed the law to say that degrees were not subject to equitable distribution.  In one of my next blogs we will examine whether the change to the New York Domestic Relations Law about degrees being subject to equitable distribution has altered the landscape about student loan debt.

When making the determination of which party is responsible for student-loan debt that was incurred solely by one party, the court was to consider many factors, including:

  • Whether the student-loan proceeds were used to cover the daily expenses of the couple;
  • Whether the partner taking on the debt did so to obtain an education that put him or her in a better position to support the family; and
  • Whether the party who did not incur the debt provided support to the party who was seeking an education (through cooking, cleaning, or providing child-care).

The bottom line is that the determination of which party is responsible for student-loan debt that was incurred during the marriage is heavily fact-dependent. Therefore, anyone who is going through a divorce that involved substantial student-loan debt should consult with a dedicated New York divorce attorney to ensure that they are treated fairly throughout the process.

Are You in the Process of Going Through a Divorce?

If you are considering divorce or have already filed for divorce and are in search of legal assistance to protect your rights and ensure fair treatment, contact the Law and Mediation Office of Darren M. Shapiro. I was admitted to practice in January 1999. Since I hung my own shingle in 2005 I have been focusing on the complexities of New York family law.  I am personally involved in every case that comes through the firm. To learn more about New York divorce law, and to set up a time to speak, call 516-333-6555 or use our contact form.

More Blog Posts:

Child Custody – Ten Frequently Asked Questions “FAQS”, Long Island Family Law and Mediation Blog, June 11, 2017

Divorce Mediation Frequently Asked Questions – FAQS, Long Island Family Law and Mediation Blog, June 17, 2017