California law gives student loans in a divorce special treatment. The same is true for marital money spent on training or education to enhance a spouse’s earning capacity. Here are the basics.
The law takes the general point of view that training or education contributions by the marital community (a married couple) to enhance the earning capacity of a spouse are reimbursable to the community. This is because the community may not have had sufficient time to benefit from a spouse’s education / training. So a court may order the marital community to be reimbursed.
The law looks similarly at student loans in a divorce. They are generally viewed as a separate obligation of the spouse who received the loan – not as a community debt.
A small percentage of couples leave it to the court to decide the division of their assets and debts and any reimbursements. If such a couple nonetheless has an agreement they want the court to consider regarding the payment of education / training costs, it must be written and signed. It also must indicate clearly what they have agreed.
If there is no such agreement, the court need not necessarily follow the guidelines above. According to the law, the court must reduce or modify the community reimbursement or assignment of student loans if it would be unjust. This could be in situations such as when:
- The marital community has substantially benefited from the education, training or student loan. There is a presumption in the law that the community has substantially benefited from community contributions to education /training made more than ten years before the divorce case was started. There is also a presumption that community has not substantially benefited from community contributions made less than ten years before the divorce case was started. These presumptions need not be the final word.
- The education / training received by one spouse is offset by education / training received by the other spouse to which the community contributed.
- Less financial support will be required because the spouse will have enhanced earnings due to the education / training.
Ideally spouses make their own divorce agreements, on their own or perhaps in divorce mediation. These address the division of their assets and debts and sometimes reimbursements. These agreements are then included in the divorce settlement they file with the court.
It’s not too common in negotiated divorce settlements for there to be an agreement for a spouse to reimburse the marital community for education / training. Perhaps this is mainly because once the money has been spent, it’s out of sight and out of mind. But such a reimbursement (and other types of reimbursement as well) can be part of the conversation.
However, it’s common in negotiated settlements for outstanding student loans in a divorce to be made the sole responsibility of the spouse who received the education / training.
Related Posts and Pages:
Division of Assets and Debts – Basics
Child Support and Spousal Support Basics