Student loan debt is becoming an increasingly common issue in Ohio dissolutions of marriage. As more people rely on educational loans to build their careers, these debts often become part of the financial picture when a marriage ends. Unlike dividing a house or retirement account, student loan debt raises unique questions about who benefited from the education, when the debt was incurred, and how repayment should be allocated. Addressing these issues carefully can help prevent long-term financial burdens for both spouses.
Why Student Loan Debt Matters in a Dissolution
A dissolution of marriage in Ohio is different from a contested divorce because it relies on mutual agreement between the spouses. The separation agreement outlines how assets and debts will be divided, including student loans. If the agreement is fair and meets legal standards, the court generally approves it without extensive litigation.
Reaching that agreement, however, can be challenging when student loans were taken out during the marriage or used to support both spouses. Because repayment can last years or even decades, how these loans are handled in the separation agreement can have lasting financial consequences. This makes it critical to understand how Ohio law treats student loan debt.
Is Student Loan Debt Marital or Separate Property?
The key question in many dissolutions is whether student loan debt is marital or separate property.
Debt incurred before the marriage is usually considered separate property. This means that if one spouse took out loans before the wedding, that spouse remains solely responsible for repaying them after the dissolution.
Debt incurred during the marriage can be treated differently. If a loan was used strictly for one spouse’s personal education, it may still be considered their responsibility. But if it also benefited the household—for example, covering rent, groceries, or shared bills—it may be treated as marital debt. In those cases, both spouses may share some responsibility, even if only one name is on the loan.
Courts may also consider how the degree or certification impacted the family. If one spouse’s education increased the household’s income during the marriage, that could influence how the debt is addressed in negotiations.
How Student Loans Are Typically Divided in Dissolution
Because a dissolution is based on an agreement between spouses, there is flexibility in how student loan debt is divided. The simplest approach is for each spouse to take responsibility for the loans in their own name. This is common when one spouse’s loans are clearly separate and weren’t used for joint expenses.
In some cases, though, the parties may decide on a different division to reach an overall fair settlement. For example, if one spouse earns significantly more because of the degree obtained during the marriage, the couple might balance things out by allocating more debt to that spouse or offsetting it with other assets.
Income differences often play a role. If one spouse has lower earning power, expecting them to shoulder a large share of joint student loan debt may not be fair or practical. Negotiated solutions can help achieve balance.
Negotiating Fair Solutions
Student loan division doesn’t have to follow a strict formula. Couples can negotiate creative arrangements that fit their circumstances. One common strategy is exchanging debt for assets. For example, one spouse might take on more of the student loan debt in exchange for receiving a greater share of savings, investments, or home equity. This can make the overall settlement more equitable.
Adjusting repayment strategies can also help. If the spouse responsible for repayment qualifies for income-driven repayment, lower monthly payments can ease the burden after the dissolution. Refinancing or consolidating loans may be an option as well, especially if it removes a co-signer or lowers interest rates.
A clear, detailed separation agreement is essential. It should specify who is responsible for each loan, how payments will be made, and how future changes—like loan forgiveness or refinancing—will be handled. Ambiguity now can lead to serious financial disputes later.
Other Factors to Consider
Even when only one spouse borrowed the money, the loan can affect both parties. If marital funds were used to make student loan payments during the marriage, the non-borrowing spouse may argue for a credit or offset in property division.
If both spouses co-signed a loan, they remain legally responsible regardless of what the separation agreement says. In those cases, refinancing to remove one spouse’s name is often the cleanest solution. Otherwise, if the primary borrower stops paying, the lender can pursue the co-signer.
Couples should also think long term. A degree may have increased one spouse’s income, but it can also mean years of repayment. Any division of debt should reflect the overall financial picture, not just the loan balance at the time of dissolution.
FAQ
Can we agree that each keeps their own student loan debt?
Yes. This is often the simplest approach, especially when each spouse borrowed separately. If both agree and it’s fair, courts typically approve this.
What if the loans were used for family expenses?
If student loans covered living expenses or supported the household, they may be treated as marital debt. The division then depends on negotiations or, if necessary, court intervention.
Does the court intervene if we disagree on loan division?
If spouses can’t reach an agreement, the court can divide student loan debt based on Ohio law. It considers factors like timing, purpose, and financial circumstances.
Can we include repayment terms in the separation agreement?
Yes. You can include repayment timelines, refinancing terms, and how to handle loan forgiveness or other future changes.
Protecting Your Financial Future
Student loan debt can complicate an Ohio dissolution of marriage, but it doesn’t have to lead to financial instability. By understanding the difference between marital and separate debt, considering income and household benefits, and negotiating creative solutions, couples can create agreements that feel fair to both sides.
Because student loans can have long-term financial consequences, it’s wise to work with an experienced attorney who can help ensure your separation agreement is detailed, enforceable, and protects your interests. A well-crafted plan today can prevent costly disputes tomorrow and provide both spouses with a stable foundation as they move forward.
For experienced guidance with student loan debt during a dissolution, contact Garretson & Holcomb, LLC in West Chester Township, OH, at (513) 863-6600. An experienced attorney can help you build a clear agreement, safeguard your financial future, and minimize post-dissolution conflicts.
