Student loan debt may be divided as part of a divorce settlement under California law. However, this is generally only true if a couple has been married for at least a decade and both spouse’s names are on the loan. In the event that an individual brought student loan debt into the marriage, he or she is likely the only person responsible for repaying that balance.
If an individual agrees to cosign for another person’s educational loans, that person is generally required to make payments if the primary borrower does not. This is typically true regardless of the relationship between the borrower and the cosigner. An individual may ask that a former spouse attempt to refinance a student loan debt in his or her own name. That would likely relieve the cosigner of any future obligation to make payments on that loan.
Refinancing a loan could also provide several benefits for the primary borrower. For instance, it could consolidate several loan payments into one monthly payment. An individual may also receive a lower interest rate by renegotiating the terms on one or more existing loans. If a primary borrower doesn’t want to refinance, a cosigner could ask the lender to be released from the agreement that he or she made. Taking such a step could help a person maintain a high credit score after ending a marriage.
Those who are contemplating a divorce may want to consult with a legal representative before filing any paperwork. An attorney may help a person understand how assets are debts are divided in a final settlement. Legal counsel may also explain how child custody and child support issues are resolved by a judge. Having this information may make it easier to negotiate a favorable divorce settlement in a timely manner.