Survey: How Student Loan Debt Impacts Divorce
It’s virtually impossible to get student loan debt discharged in a bankruptcy, so you’re stuck with it – which can exacerbate your other marital issues. In fact, more than a third of student loan borrowers claim that debt contributed to their divorce.
Going through a divorce can be complicated and expensive. The average cost ranges between $12,500 and $19,200, depending on whether there are children involved, according to Lawyers.com. But according to a recent debt and divorce survey, student loan borrowers tend to have it worse than people without student loans. Here’s what we found.
How Student Loan Debt Impacts Divorce
- Student loan borrowers take on more debt in a divorce. Fifty-eight percent of divorcees with student loans took on debt to help pay for attorney fees and other related costs during their divorce proceedings. Compare that with 48% percent of all divorcees who didn't borrow money to pay for a divorce.
- Couples with student loan debt are more likely to delay divorce because of cost. More than a third of respondents with student loans (35%) delayed their divorce because they couldn’t afford it, compared with 24% of couples without student debt.
- Student loan debt is a contributing factor in some divorces. Thirteen percent of respondents who had student loan debt going into their marriage claim that it eventually led to the end of their marriage.
- Divorce has caused the majority of divorcees to change their money habits. Almost 7 in 10 divorcees have changed how they manage their money after their divorce. This holds true for people with and without student loans.
The Costs Associated with DivorceThe cost of a divorce can vary depending on how you handle it and what’s involved. For example, mediation can be cheaper than a litigated divorce where one or both sides contest the terms of the divorce. Common costs associated with divorce include:
- Lawyer fees,
- Document fees,
- Appraisal/valuation fees,
- Accountant fees,
- Parenting classes,
- Therapy/divorce coaching fees,
- Custody assessment, and
- Court fees.
Why Student Loan Debt Can Lead Divorcees to Take on More DebtThe Class of 2017 graduates left school with $39,400 in average student loan debt. With a 10-year repayment term and a 6.00% interest rate, that’s a monthly payment of $437. So it’s no surprise that 28% of student loan borrowers with federal loans in 2017 were on income-driven repayment (IDR) plans, according to the College Board. These plans make it possible to get a lower monthly payment based on your discretionary income and family size rather than on the original repayment terms. When you have monthly payments that you can’t afford or that are stretching your budget too thin, paying thousands of dollars for a divorce out of pocket can be difficult. Based on our survey, 58% of student loan borrowers took out more debt to cover the costs of their divorce versus 43% of people without student debt. What’s more, 23% of student loan borrowers borrowed $10,000 or more for their divorce, and 10% took out $30,000 or more in loans.
Why Delaying Divorce Because of Student Loan Debt Can be CostlyStudent loan borrowers are more likely to delay their divorce. Of the people we surveyed, 35% of respondents with student loan debt had delayed the proceedings because of cost, while only 24% of people without student loans did so. But delaying a divorce can come with its own costs. “People’s whole situations can change,” said Harrison. “There are a lot of different factors that come into place. Things may change financially for you where things get worse, and if you had gotten some assistance, you could have gotten a divorce when you wanted it.” To avoid this problem from the get-go, Harrison recommended getting a prenuptial agreement. “The easiest time to get someone to agree with something is when you’re in love,” she said. Here are some other potential issues that could come up:
- New and appreciated assets: Any assets that you accumulate before you file for divorce could still be considered marital property.
- Spousal support: If you’re going to be on the hook for spousal support, the amount and duration of your monetary support are partially based on the length of your marriage.
- Emotional costs: Nobody wins in a divorce, and delaying the end of a tumultuous relationship can be hard on you and your spouse. If children are involved, delaying the inevitable can also be hard on them.
- Moving on: Waiting to get divorced can make it difficult to move on. In fact, if you start a new relationship or move out before filing for divorce, that decision could be used against you, especially if it comes to a custody battle.
How Student Loans Can Lead to DivorceMore than a third of student loan borrowers claim that debt and other money factors contributed to their divorce, whereas only 23% of divorcees with no student loans claim the same reasons. In fact, 13% of divorcees blame student loans specifically for ending their marriage. Harrison sees how student loans could make other problems worse, but she doesn’t see them as the primary reason for someone wanting to leave a marriage. “Usually there’s some relationship stuff that’s going on, and then on top of that, they start to complain about the debt,” she said. “I don’t think [student loan debt] would be the driving factor, but it’s definitely a secondary factor.” That said, money problems of any kind can make for a rough marriage, and if you have oppressive student loan debt, the financial pressure can become unbearable. Large debt balances and monthly payments can make it difficult to buy a home, save for retirement, or make it from paycheck to paycheck. And since it’s virtually impossible to get student loan debt discharged in a bankruptcy, you’re stuck with it whether or not you can afford it. This feeling of being trapped can exacerbate all the other issues you encounter in marriage, money-related or not. Another survey we did about student loans and relationships found other ways student loan debt can harm a marriage. For example:
- Thirty-six percent of student loan borrowers report having lied to a partner about money.
- Roughly a third of respondents claimed a decreased sex drive because of their student loans.
- Many student loan borrowers have delayed big relationship steps because of their debt, including starting a family and taking their first romantic getaway.
Ben Luthi is a contributor to Student Loan Hero who writes about credit cards, insurance, student loans, and other personal finance topics. His work has appeared in publications like USA Today, The Christian Science Monitor, Success Magazine, Time Money, and more. www.studentloanhero.com/author/benluthi