In this era it is hard to meet any young adult who does not have some amount of debt, with the most common form being student loans. These loans can be hefty, as college, graduate school, and living expenses are incurred. But what happens when you marry, and then separate from someone who has student loans? Is the community entitled to any reimbursement for helping pay those loans down during the course of the marriage? Does it matter if the loans were incurred during marriage or before marriage? The answer is, it depends.
To begin this analysis, it is important to start with the statute that addresses this issue. Family Code section 2641 states that, “the community shall be reimbursed for community contributions to education or training of a party that substantially enhances the earning capacity of the party.” The statute further defines “community contributions” as any payments made with community or quasi-community property. So the first answer to our question is yes, generally the community is entitled to be reimbursed for contributions for one party’s student loans.
Next, the statue states that a reimbursement “shall be reduced or modified to the extent circumstances render such a disposition unjust.” The most common reason a reimbursement would be reduced or modified is because the community substantially benefited from the education or training of the party. In California there is a rebuttable presumption that the community has substantially benefited from “community contributions to the education or training [of a party] made more than 10 years before the commencement of the proceeding.” The benefit that the community received is usually in increased wages. Put another way, if a party incurred student loans over 10 years ago there is a presumption that the community benefited from those loans. For example, if the spouse went to law school over 10 years ago there is a presumption that the community has already benefited from that party attending law school, such as getting a job as a lawyer and earning a healthy income. The other spouse can rebut that presumption by proving that the community, in fact, did not benefit. For example, if the spouse never worked as an attorney or took a public interest job that does not pay as much.
Based on the above, the community should generally be reimbursed for contributing to a spouse’s student loans during the marriage. However, that reimbursement can be reduced or modified under certain circumstances, for example, when the community has already benefited from the education/loans.
Student loan reimbursement is just one aspect of analyzing a divorce case. It is important to find an experienced family law attorney that can explain all your options during this difficult time.
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