According to the data released for law school graduates in 2011, San Diego law students graduate with one of the highest debts in the country. California Western School of Law and Thomas Jefferson School of Law take spots two and three respectively on the list of the average indebtedness incurred. 89% of California Western and 94% of Thomas Jefferson graduates incurred debt during law school. The average debt incurred for a California Western education is $153,145 compared to $153,006 for a Thomas Jefferson education. With such high debts to consider, married students should know how this debt would be allocated upon divorce.
As a general rule, a debtor spouse’s separate property and all of the community property are liable for debt incurred before or during marriage. However, the non-debtor spouse’s is not liable for this debt. The California Family Code contains several special rules specifically regarding education and training. As an exception to the general division of debt, any student loan debt outstanding at divorce is assigned solely to the educated spouse. If a spouse is married when he or she receives his or education, community funds may have been used to pay for the education.
Education and training acquired during marriage is not treated as community property. Therefore the non-educated spouse can claim no interest in the education of the other. Instead, upon divorce, the community may be entitled to an equitable right to reimbursement with interest when: (1) community funds are used either to pay for the education or training or to repay a loan related thereto and (2) education or training substantially increased the earning capacity of the spouse. Therefore, in the case of law school debts, if the non-student’s earnings during the marriage contribute to the student’s education, the community may be entitled to repayment for this amount.
The educated spouse may advance some defenses to reimbursement. If both spouses received a community-funded education then the community would likely not be entitled to reimbursement. Reimbursement may be reduced or modified if the community has already substantially benefitted from the education or training. There is a rebuttable presumption that the community has already benefitted if more than ten years have elapsed between the contributions and the initiation of divorce. This presumption enables the court to allocate an equitable division of property upon divorce. It assumes that the educated spouse has already returned the educations expenses to the community in the form of increased earnings.
If the education or training reduced the need for spousal support then the community may not be awarded reimbursement. Under this equitable theory, the educated spouse must be more financially self-sufficient as a result of the education. For instance if the spouse had low to no income before he or she went to school and then earned a higher salary as a result of his or her qualifications he or she has a reduced need for spousal support.
Please contact us if you are considering a divorce from your spouse, a legal separation, or have questions regarding child custody and visitation. Nancy J. Bickford is the only attorney in San Diego County representing clients in divorces, who is a Certified Family Law Specialist (CFLS) and who is actively licensed as a Certified Public Accountant (CPA). Don’t settle for less when determining your rights. Call 858-793-8884 in Del Mar, Carmel Valley, North County or San Diego.