Laws About Who Pays the Student Loan Debts Upon Divorce

1. If you took the student loan out before you were married, then it is your separate debt upon divorce;
2. If you took the student loan out during your marriage, then it is “presumed” to be a debt of both spouses of the marriage (i.e. a “community debt” that will be split by the parties upon divorce).
3. But, if there is evidence that a creditor took only one spouse’s credit into account when the creditor gave the student loan out, then this evidence will change the presumed community debt into a separate debt of just the incurring spouse. .” Marie v. Velasquez, No. 04-08-00271-CV, 2008 WL 5082989, at *1 (Tex. App.-San Antonio Dec. 3, 2008, pet. denied) (mem. op.)

McCoy v. McCoy Texas Court of Appeals, 2nd District, 2016:

“Jason’s reimbursement claim expressly hinges upon the characterization of his student loans as separate, rather than community, property. Community property consists of all property, other than separate property, acquired by either spouse during marriage. Tex. Fam. Code Ann. § 3.002 (West 2006). Property owned before marriage, or acquired during marriage by gift, devise, or descent, is separate property. Id. § 3.001 (West 2006). Property possessed by either spouse during or on dissolution of the marriage is presumed to be community property. Id. § 3.003(a) (West 2006). The community property presumption applies to both assets and liabilities. Richardson v. Richardson, 424 S.W.3d 691, 697 (Tex. App.-El Paso 2014, no pet.). Thus, “[d]ebts contracted during marriage are presumed to be community debt and therefore become community obligations at divorce unless there is evidence that the creditor agreed to look solely to a party’s separate estate.” Marie v. Velasquez, No. 04-08-00271-CV, 2008 WL 5082989, at *1 (Tex. App.-San Antonio Dec. 3, 2008, pet. denied) (mem. op.). To overcome the community property presumption, the complaining party must rebut the presumption by clear and convincing evidence. Tex. Fam. Code Ann. § 3.003(b).”

If You Paid Off Your Husband or Wife’s Student Loans, Do They Have To Pay You Back Upon Divorce?

Two Texas cases have held that if you paid for your husband or wife’s student loans during marriage, you will not be reimbursed upon divorce.  Halbert v. Halbert, 794 S.W.2d 535 (Tex. App.–Tyler 1990, no writ) and Frausto v. Frausto, 611 S.W.2d 656 (Tex. App.–San Antonio 1980, write dism’d).

In Frausto v. Frausto, the trial court was actually reversed on appeal when a spouse was awarded $20,000 to reimburse payment of student loans.  Also Texas Family Code Ann. Section 3.409(5) expressly states that spouses will not be reimbursed for student loans.

What would the court do?

When figuring out how to settle your divorce in a friendly manner, a most important question is what would happen if you brought a dispute about student loans to court.  The Texas law is fairly predictable on there points– If you incurred the student loans before you were married, the court absolutely will assign you 100% of those debts upon divorce.  So, you should agree to pay 100% of your student loans during your divorce settlement (if you had those loans before the marriage).

If you took the loans out during the marriage, then you should still agree to pay 100% of those loans, UNLESS the line of credit given to you for your education was given based on your credit AND your spouse’s credit combined.