What happens to your student loan when you separate?
Student loan separation is an issue many people face when a relationship ends. Many assume all debts are divided equally, but student loans are usually treated differently.
Who is responsible for the student loan debt after separation?
When it comes to student loan separation, responsibility usually stays with the person who took out the loan.
This is generally the case even if the loan was taken out during the relationship. Unlike many other debts, a student loan is usually treated as a personal debt rather than something that is shared between partners.
Can it affect the division of property?
There are some exceptions to this general rule. For example, a student loan may be taken into account if it benefited both partners. This could include situations where the living costs component of the loan was used to help pay household expenses, or where the loan enabled the couple to move to New Zealand for study or work opportunities.
Repayments can also be relevant. If a student loan has been repaid using relationship income or money from a joint account, the other partner may be entitled to compensation for those repayments.
However, this does not usually change the fact that the student loan itself remains the responsibility of the person who borrowed it.
What if one person is left with more debt?
This issue can arise where one partner has spent time out of the workforce caring for children and has been unable to make repayments on their student loan, while the other partner has continued working and reduced their own student loan balance.
When the relationship ends, the first partner may still be left with a significant debt to repay.
In some situations, the law may provide a way to address a significant difference in the parties’ financial positions after separation. Whether this is available will depend on the particular circumstances of the relationship.
Need advice?
If you are separating and are unsure how a student loan may be treated, please get in touch with our team. We can help you understand what it means for you and guide you through your options.
This article is brief and general in nature. You should not treat it as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this post. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this article.
