How are Student Loans Divided in Illinois Divorces?

In divorce, spouses have to divide more than just the marital assets; they also need to split up the marital debts. This can get complicated quickly, especially when one or more spouse still has student loans to pay off. In Illinois, the Illinois Marriage and Dissolution of Marriage Act (IMDMA) sets out rules for classifying and dividing marital property, and “property” here includes debts.

As the cost of higher education continues to rise, more spouses bring significant student loan debt into marriage or take on additional loans during the marriage. You might be wondering, “How do Illinois courts allocate student loan debt that one spouse has taken out for their own education?” Typically, the debt sticks with the party who incurred it.

What Does the Statute Say?

Illinois law does not carve out special rules for student loans. Instead, those loans fall under the provisions of the IMDMA that address the division of marital property.

• 750 ILCS 5/503(a): This section defines marital and non-marital property and debts. A debt incurred before the marriage is non-marital and generally remains the responsibility of the spouse who incurred it. Conversely, debts incurred during the marriage are presumed to be marital obligations.
• 750 ILCS 5/503(b): This section states that all property and debts acquired by either spouse after the marriage and before a judgment of dissolution are presumed to be marital.
• 750 ILCS 5/503(d): This section lays out the factors courts consider in dividing marital property and debts.

Let’s say your spouse went back to school and earned their master’s degree during your marriage. Now you are seeking divorce, and you are worried that you will have to be personally responsible for part of that debt. While it is true that your spouse’s student debt is technically marital property, the Court will consider several factors when deciding the equitable split of the entire estate – assets and debt combined.

These factors include, but are not limited to:

• Each spouse’s contribution to the increase or decrease in the value of the marital estate.
• The value of property assigned to each spouse.
• The duration of the marriage.
• Future earning potential of each spouse.
• The economic circumstances of each spouse at the time of division.
• Any prenuptial or postnuptial agreements that exist.

Who Has to Pay the Student Loans?

Many of the factors just listed weigh in the favor of allocating student loan debt to the party who was the student borrower.

For example, the Court must consider “the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, and needs of each of the parties.” 750 ILCS 5/503(d)(8). After the divorce, the spouse who received the advanced degree will have the advantage of being employable in that field, having increased vocational skills, and access to greater sources of income as a result of their education. It makes sense that they would be allocated the majority of that debt.

The Court will also consider “each party’s contribution to the acquisition, preservation, or increase or decrease in value of the marital or non-marital property.” 750 ILCS 5/503(d)(1). The spouse with the student loans caused the marital estate to decrease in value. They will be responsible for paying said debt.

“Where one party is substantially responsible for the creation of the debt and has a substantially greater capacity to earn money, it is not an abuse of discretion for the trial court to assign the overwhelming majority of debt to that party.” In re Marriage of Werries, 247 Ill. App. 3d 639, 649–50 (1993).

EXCEPTION to the Rule: In re Marriage of Logsdon, 2014 IL App (4th) 140207-U

In In re Marriage of Logsdon, decided by the Illinois Appellate Court in 2014, the trial court had to decide how much responsibility each spouse should for bear for Wife’s student loan debt, and it departed from the norm for a few key reasons.

While the court found that Wife’s student loan debt was marital property, it assigned a greater share of the debt to Husband.

In total, Wife had taken out over $85,000 in student loans for her post-graduate education. Rather than this money all going toward tuition, books, and supplies, $53,000 of the loans was put toward the couple’s living expenses. During the marriage, the parties used this loan money to pay for their daily living expenses, property taxes, and medical expenses. Husband also used this money to pay off his personal, non-marital debts. For this reason, the Court deemed it equitable for Husband to be responsible for paying off 75% of Wife’s student loans. On appeal, the Fourth District affirmed the trial court’s decision.

Again, Logsdon is a departure from the norm. Illinois courts typically assign student loans to the spouse who incurred them. Above all, the allocation of marital debt must be based on the statutory factors and must be fair and equitable.

Practical Considerations for Divorcing Spouses

If you are entering a divorce with student loan debt, whether it is your own or your spouse’s, it is important to understand how Illinois courts may approach the issue.

The best thing you can do is make sure your financial documents are in order. Know when the loans were taken out, how much was loaned, and what the interest rates are. Know how much has been paid back, when, and from which accounts. Then talk to your family law attorney for detailed guidance on how your marital debt might be allocated.

A Chicago Divorce Lawyer Can Help With Complex Finances

Student loans can add a layer of complexity to Illinois divorces. While the IMDMA does not mention them by name, they fall squarely under the statute’s general debt classification and division provisions in 750 ILCS 5/503. While student loan debt typically follows the person who accrued it, Illinois courts have broad discretion in dividing marital debt, so long as the result is fair under the circumstances. If you are unsure of how your student debt will be handled in your impending divorce, schedule a consultation with an attorney at O. Long Law, LLC, for some clarity. Our experienced attorneys are standing by to help you.