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 our debt and divorce survey, student loan borrowers tend to have it worse than people without student loans. Here’s what we found.
- 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 borrowed 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 divorce
The 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 annulment. Common costs associated with divorce include:
- Lawyer fees
- Document fees
- Appraisal fees
- Accountant fees
- Parenting classes
- Custody assessment
- Court fees
Respondents to our survey spent an average of $18,652 on their divorce proceedings. Interestingly, student loan borrowers spent over $2,000 more than people without student loans on their divorce.
Besides paying these costs, you may be on the hook for some of your ex-spouse’s student loan debt, which could make your divorce even more expensive. Specifically, this is the case if you live in a community property state, which includes Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
“If a person applies for that debt while they’re married, it’s considered community property,” said Taetrece Harrison, a New Orleans-based family law attorney at Harrison Law Group. “So, half the debt is yours, and half the debt belongs to the spouse. It doesn’t matter if the loan only has your name on it.”
If you get married, for instance, and your spouse takes out $50,000 in student loans to pay for graduate school, you could be forced by the court to split the student loans and pay half of it.
According to Harrison, it’s possible to create a payment plan with the court, but you may need to pay the full amount all at once.
Why student loan debt can lead divorcees to take on more debt
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 can be costly
Student loan borrowers are more likely to delay their divorce because of the costs associated with an annulment. 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 can still be considered marital property.
- Alimony: If you’re going to be on the hook for alimony, 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 divorce
More 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 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.
While student loan debt isn’t guaranteed to cause problems in a marriage, it can be a concern.
What you can do about your student loan debt
If you’re trying to manage student loans and marital problems, finding ways to reduce your debt burden can help relieve some of the pressure.
If you’re already considering divorce, you can still improve your monthly cash flow and reduce the amount of debt you need to take on as a result of the annulment. Consider these steps.
1. IDR plans
If you have federal student loans and aren’t already on an IDR plan, applying for one could reduce your monthly payment to between 10% and 20% of your discretionary income.
This option alone can ease a lot of short-term cash flow problems and make it possible to cover other essential expenses and work toward other financial goals. But keep in mind that private student loan companies typically don’t offer IDR plans.
2. Apply for a forgiveness program
Federal student loans also give you access to loan forgiveness, primarily through the Public Service Loan Forgiveness (PSLF) program and teacher loan forgiveness.
The PSLF program, for instance, offers forgiveness after you’ve made 120 qualifying monthly payments if you work for a qualifying government or nonprofit organization and meet other requirements.
While this may not necessarily solve short-term problems, it can be the light at the end of the tunnel that you need right now.
3. Student loan refinancing
Student loan refinancing companies allow you to consolidate your student loans into one new loan and potentially get a lower interest rate or monthly payment in the process.
These lenders offer both fixed and variable interest rates, but you typically need a great credit score and financial profile to get the lowest rates available.
Student loan companies also allow you to change your repayment term — some of the best lenders go up to 20 years — which can also help you lower your monthly payment.
One drawback to refinancing federal student loans is that you lose certain benefits, such as access to IDR and certain student loan forgiveness programs. But if you don’t need those benefits and you can get a lower rate or payment through refinancing, it can be worth it.
Whatever you choose to do with your student loans, it’s essential that you take the time to do your research and consider all your options.
By doing your due diligence, you can potentially improve your relationship with your spouse. And if not, you can at least improve your financial situation for the long term.
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Interested in refinancing student loans?Here are the top 8 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.20% APR (with Auto Pay) to 6.99% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.89% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of December 13, 2019, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 12/13/2019. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for SoFi.
3 Important Disclosures for Figure.
Figure’s Student Refinance Loan is a private loan. If you refinance federal loans, you forfeit certain flexible repayment options associated with those loans. If you expect to incur financial hardship that would impact your ability to repay, you should consider federal consolidation alternatives.
4 Important Disclosures for College Ave.
College Ave Disclosures
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
1College Ave Refi Education loans are not currently available to residents of Maine.
2All rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
3$5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees.
4This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2020. Variable interest rates may increase after consummation.
5 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of November 8, 2019 and is subject to change.
6 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers.
7 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 1.76% effective November 10, 2019.
8 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
Subject to floor rate and may require the automatic payments be made from a checking or savings account with the lender. The rate reduction will be removed and the rate will be increased by 0.25% upon any cancellation or failed collection attempt of the automatic payment and will be suspended during any period of deferment or forbearance. As a result, during the forbearance or suspension period, and/or if the automatic payment is canceled, any increase will take the form of higher payments. The lowest advertised variable APR is only available for loan terms of 5 years and is reserved for applicants with FICO scores of at least 810.
As of 12/019/2019 student loan refinancing rates range from 1.90% to 8.59% Variable APR with AutoPay and 3.49% to 7.75% Fixed APR with AutoPay.
|1.99% – 6.89%1||Undergrad & Graduate|
|2.31% – 7.36%2||Undergrad & Graduate|
|2.06% – 6.81%3||Undergrad & Graduate|
|2.62% – 6.12%4||Undergrad & Graduate|
|1.99% – 6.65%5||Undergrad & Graduate|
|1.99% – 7.06%6||Undergrad & Graduate|
|1.85% – 6.13%7||Undergrad & Graduate|
|1.90% – 8.59%8||Undergrad & Graduate|