What Happens to Student Loans in Divorce?

Federal Student Loans

Federal loans (Direct Subsidized, Direct Unsubsidized, PLUS loans) are issued by the U.S. Department of Education. They are always in one individual's name — there is no such thing as a “joint” federal student loan (with one critical exception: the now-discontinued Joint Consolidation Loan, discussed below). Because the loan is in one person's name, the federal government considers that person solely responsible regardless of what a divorce decree says.

Private Student Loans

Private loans from banks, credit unions, or online lenders can have co-signers — and frequently do. If your spouse co-signed your private student loan (or vice versa), both of you are legally responsible for the debt regardless of divorce. The lender does not care about your divorce settlement. If the primary borrower stops paying, the lender will come after the co-signer.

Loans taken out before the marriage

In virtually every state, student loans that existed before the marriage are considered separate debt. They belong to whoever borrowed them. Your spouse's $80,000 in law school loans from before you met? That stays with them. This is one of the clearer areas of divorce law.

Loans taken out during the marriage

This is where it gets complicated. Student loans taken out while married may be considered marital debt, depending on your state. In community property states, debt acquired during the marriage is presumed to belong to both spouses equally. In equitable distribution states, the court decides what is “fair” — which is not necessarily 50/50.

Community Property States (9 states)

Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. In these states, most debts incurred during the marriage are considered community debt — owned equally by both spouses, regardless of whose name is on the loan.

However, even in community property states, there are exceptions. If the education did not benefit the community (for example, if a spouse went back to school right before filing for divorce and never earned income from the degree), a court may assign the debt solely to the borrower.

Equitable Distribution States (41 states + D.C.)

Every other state follows equitable distribution. “Equitable” means fair, not equal. Courts consider factors like each spouse's income, earning capacity, the length of the marriage, and who benefited from the education.

In practice, equitable distribution courts more often assign student loan debt to the borrowing spouse — but they may offset it by awarding the non-borrowing spouse a larger share of marital assets or higher spousal support.

Filing taxes jointly vs. separately

Under most IDR plans, if you file taxes jointly, your combined household income determines your payment. After divorce (or if you file Married Filing Separately during the divorce process), only your income counts. For the lower-earning spouse, this can mean dramatically lower monthly payments — sometimes hundreds of dollars less per month.

Recertification timing

You must recertify your income annually for IDR plans. After your divorce is finalized, recertify as soon as possible using your individual income and new filing status. Do not wait for the annual reminder — you can recertify early if your financial situation has changed, and you should.

The SAVE Plan consideration

The SAVE (Saving on a Valuable Education) plan, which replaced REPAYE, calculates payments based on individual income even if you file taxes jointly. This can be advantageous during the divorce process before your filing status changes. Check with your loan servicer to see if switching to SAVE before or during divorce could lower your payments.

Refinancing to remove the co-signer

The primary borrower can apply to refinance the loan in their name alone. This requires sufficient credit score, income, and debt-to-income ratio to qualify independently. If your ex cannot qualify for refinancing, you remain on the hook. Make this a condition of the divorce settlement with a specific deadline (e.g., “Borrower must refinance within 12 months of the divorce being finalized, or the home equity share will be adjusted accordingly”).

Co-signer release programs

Some private lenders offer co-signer release after a set number of on-time payments (typically 24 to 48 consecutive payments). Check with the lender to see if this option exists and what the requirements are. Do not assume it will happen automatically — you usually have to apply, and approval is not guaranteed.

Protect yourself in the meantime

If you are a co-signer and cannot get off the loan immediately, set up alerts through the lender so you are notified of any missed payments. A single missed payment by your ex can destroy your credit score. Some co-signers negotiate the right to make payments directly to the lender (and then seek reimbursement from the ex) to maintain control.

New York: The strongest protection

New York is the only state that explicitly treats professional degrees and licenses as marital property that can be valued and divided. The landmark case O'Brien v. O'Brien (1985) established that a medical license obtained during marriage is marital property subject to equitable distribution. Courts calculate the enhanced earning capacity the degree provides and award the supporting spouse a share.

Most states: Compensatory support instead

The majority of states do not treat degrees as divisible property. Instead, courts may award reimbursement alimony or compensatory spousal support to the spouse who supported the student. This compensates for the direct financial contributions (tuition, living expenses) and sometimes for lost career opportunities. The amount is typically less than what a “degree as property” division would yield.

How it affects student loan division

If a court considers the degree a marital asset or awards compensatory support, it is more likely to assign the associated student loans to the degree holder. The logic: you got the degree, you got the earning power, you pay the loans. But if the court finds the non-student spouse also benefited (through years of higher household income), the loans may be shared.

Student loan interest deduction

You can deduct up to $2,500 in student loan interest per year. After divorce, only the person legally obligated to pay the loan AND who actually makes the payments can claim the deduction. If your divorce settlement assigns payment responsibility to your ex but you are the one making payments as a co-signer, the deduction rules get complicated — consult a tax professional.

Filing status change

Your filing status in the year of divorce affects your student loan obligations and tax benefits. If your divorce is finalized by December 31, you must file as Single or Head of Household for that entire tax year. This changes your income brackets, standard deduction, and eligibility for the student loan interest deduction (which phases out at higher income levels for single filers).

Loan forgiveness tax bomb

Under most IDR plans, remaining loan balances are forgiven after 20–25 years of payments. Prior to 2026, this forgiveness is tax-free under a temporary provision. However, if this provision expires, forgiven amounts could be treated as taxable income — potentially creating a tax bill of tens of thousands of dollars. Factor this into long-term settlement negotiations.