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Christina: This is Christina.
Ed: This is Ed. Today, are going to talk about student loans. Student loans obtained before the date of marriage are the educated party’s separate debt because the loan was incurred before marriage. What about student loans incurred during the marriage?
Christina: A general rule is that debts incurred between the date of marriage and the date of separation are community debts and, upon a divorce, community debts are equally divided. However, educational loans are one of the exceptions to this general rule. Educational loans are typically not equally divided. Educational loans are frequently assigned to the person that received the benefit of the education.
Ed: Are student loans always assigned to the person that received the benefit of the education?
Christina: Not always. If assigning the entire educational loan to the party that received the education or training would produce an unjust result, then the court has the discretion to allocate the loan in a fair manner between the parties.
Ed: What does the court look at when deciding whether the student loan should be assigned solely to the person who received the education versus being divided between the parties in some fashion?
Christina: Factors that the court can take into consideration are the following:
- Did the community substantially benefit from the education, training, or loan? There is a rebuttable presumption that the community did not substantially benefit if the education or loan was incurred less than 10 years before the divorce.
- Is the education or training received by one party offset by an education or training received by the other party for which community contributions were made?
- Does the education or training enable the party that received the education or training to engage in gainful employment that substantially reduces the need of that party for support that would otherwise be required?
Ed: What if, instead of a loan, community funds were used to pay for all or part of one party’s education or training?
Christina: If, instead of a loan, community funds were used to pay for all or part of one party’s education then, upon a divorce, the community may be entitled to be reimbursed by the educated party. If you want more information on the community’s right to make claims for reimbursement, take a look at the following California Family Code statutes: Family Code 2627 and Family Code 2641. Google “California Family Code 2641” and “California Family Code 2627” to read these two statutes.