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College Debt & Divorce

As parties divorce, one looming issue is debt. Often, parties may be loaded with college debt that they have co-signed for one or more children. This debt can easily be more than six figures depending on the number of children and the school.

Parties in divorce mediation who have minor children often say that they want to do what is best for their children; guilt on getting divorced drives people to take on incredible amounts of debt for student education. Often one party in divorce negotiations wants the other to agree to equally share college expenses and sign student loans for their children.

The NY Times published a wonderful article in August 2016 concerning this issue. Co-signing student loans for two children can put either parent in the position that due to extensive debt, they cannot obtain a new loan for a car or business venture; a mortgage may be denied due to extensive debt. A co-signer is just as liable to pay the debt as the child (often both must sign the student loan agreement). If the child cannot find employment or if the child's first few years of income are just enough for the child to get by, the parent is on the hook for the payments. If the child is making payments but they are made late, the parent's credit score can be reduced.

There is also the risk that only one parent co-signs the student loan. If the child does not ay, legally the lender goes after that co-signer, who then must seek reimbursement from the other parent (as long as that is provided for in the parties' agreement).

Perhaps tough love must be used. If the child needs a private loan as an undergraduate, then maybe the choice of college must be changed.

In all divorces, the issue of whether to fund college must be carefully thought out (and often, since RI courts cannot mandate college payments, it is often not considered). If there is significant college debt as you approach a divorce, get good records for each loan and be sure to see who signed each loan.

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Law Office of Steven J. Hirsch, Esq

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