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Student Loans can be Considered Marital Debt in Colorado but the Associated Degree cannot be Considered Marital Property

October 3, 2018

Student loans incurred during a marriage in Colorado are marital debt. Even loans incurred after the parties have filed for divorce but before the decree of dissolution is entered are marital debts. However, a classification as marital debt does not automatically mean that the debt must be divided equally between the parties. Colorado is an equitable distribution state which means that assets and debts of the marriage are to be divided fairly but not necessarily equally. What is fair in a particular case will depend on the facts and circumstances of that case. Some things the court may consider associated with dividing marital debt is the length of the marriage, the income earning ability of each party, whether the loans were incurred for payment of tuition or for payment of living expenses, the financial contributions of each spouse to the marriage, the value of the property set aside to each spouse and whether or not both parties agreed that the taking of the loans for educational purposes was appropriate. That list of considerations is certainly not an exhaustive list as court’s can consider anything relevant to a particular case other than marital misconduct.

In contrast to the treatment of student loans, the associated college degree is not considered property for purposes of division in a divorce proceeding. Courts can consider each party’s degrees earned as a financial circumstance in making orders dividing marital property or considering spousal support but the actual degree itself will not be valued and awarded to the spouse who earned it with off-setting assets to the other party.  One Colorado Appellate case involved a litigant who argued that his spouse’s student loans associated with a law degree earned during the marriage should not be considered marital debt because the associated law degree could not be divided as marital property. That argument was denied in Colorado. The Court of Appeals decision mentions that it is not uncommon for a spouse’s pursuit of a college degree to be a joint goal of the parties and is typically intended to increase the standard of living for both parties, which supports the standard that student loans should be considered marital debt. Additionally, it is not uncommon for marital debt to be incurred for more than just tuition payments and book expenses, making it sometimes more equitable for the loans to be divided between the parties.

It is important to be informed in the loan process along with your spouse, as the debts taken could end up as a joint obligation in the event of a divorce.

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The Law Firm of Anderson & Baker, LLC 970.259.1211

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