Student debt is common and the hardship it creates can weigh heavily on the shoulders of former students dealing with it and trying to pay the loans off. Dealing with student debt is an issue that must be faced during divorce.
In California, student debt is covered by Family Code Section 2641. At Kim Mediation and Law Center, we can help you find your way through the legal maze to reach an agreement on how to divide this debt that is consistent with the law and that works for both you and your soon-to-be-ex-spouse.
Applicability of Section 2641
California is a community property state which means all assets accumulated during the marriage belong equally to the spouses. This includes each spouse’s earnings from their employment. Family Code Section 2641 applies to loans acquired for the education or training of a party that “substantially enhances the earning capacity of the party” and where payments were made on those loans out of community property funds.
The code section requires, with some exceptions, the person who took out the loans and who profited from the education to reimburse the community for the payments that were made. There are factors that the court will consider when making its final order. Some of those are:
- What were the loan funds used for? If they were used for tuition, books, supplies, and other materials used exclusively for the pursuit of education and training, they will be considered the separate debt of the person who took out the loan.
- If they were used for living expenses for both Parties during the marriage, then the person who took out the loan will likely not have to reimburse the community.
There are other factors the court may consider.
Presumptions Concerning the Length of the Marriage
The court will also consider if the community has “substantially benefited from the education, training, or loan incurred for the education or training of the party.”
For marriages that lasted less than 10 years, there is a presumption that the community did not benefit from the education or training.
For marriages that lasted more than 10 years, there is a presumption that the community did benefit from the education or training.
For assistance with the division of student debt during your divorce process, contact us at Kim Mediation and Law Center. You can reach us at 213-351-1000.