Unless it would be “unjust,” or a married couple otherwise agrees in writing, California Appellate court’s have held that, a spouse’s student loans “must be assigned for payment to the spouse who obtained the education or training.” (California Family Code Section 2627) But, if the community “substantially benefited” from the spouse’s education during marriage, the loan can be divided and awarded to each spouse equally.
When has the community substantially benefited from a student spouse’s education?
That’s a tricky question to answer.
According to California’s Appellate Courts, there are two rebuttable presumptions (presumptions that may be overcome with evidence) about whether the community has substantially benefited from community contributions to the education or training, and they are:
Less than 10 years: If the student loans were incurred less than 10 years before commencement of the proceedings for Legal Separation, divorce or the dissolution of a domestic partnership, there is a legal presumption that the community did not not benefit from the student’s education, and the student debt will be assigned to the student spouse unless the student spouse proves the community substantially benefited from the education.(Fam.C. § 2641(c)(1))
A student may prove and a judge can find that the community benefited substantially from the student spouse’s education in less than ten years if the couple enjoyed a high standard of living or accumulated substantial community assets as a result of the student spouse’s education paid with community property funds or the student loan at issue.
More than 10 years: If the student loans were incurred more than 10 years before commencement of the proceedings for Legal Separation, divorce or the dissolution of a domestic partnership, there’s a legal presumption that the community benefited from the student’s education and it would be “unjust” to assign the debt solely to the student unless, the non-student spouse proves the community did not substantially benefit from the education. (Fam.C. § 2641(c)(1))
If the community did not substantially benefit from the education a student spouse received ten years before commencement, the student spouse can/should be responsible for the unpaid student loan and a judge may order the student spouse to reimburse the community for loan payments paid with community property plus interest.
What are reimbursable expenses and how do you collect?
Reimbursable expenses are those directly related to a spouse’s education, including tuition, books, fees, and supplies, but do not include ordinary living expenses such as housing, food, medical care, etc.
The right to reimbursement under California Family Code Section 2641 isn’t automatic and the spouse who seeks reimbursement must make a formal legal request and trace community funds to reimbursable expenses. A spouse who seeks reimbursement also must prove that the community contributions substantially enhanced the student spouse’s earning capacity and that the community did not receive quid pro quo benefits during marriage or the domestic partnership and before the divorce.
It is often difficult to prove the facts that establish a right of reimbursement for educational costs under California Family Code Section 2641.
California law and cases on point include:
California Family Code section 2641
California Family Code section 2627
California Family Code section4320(b) and (d)
In re Marriage of Lucas (1980) 27 C3d 808
In re Marriage of Watt (1989) 214 CA3d 340
In re Marriage of Rocha (1998) 68 CA4th 514
Marriage of Graham (2003) 109 CA4th 1321
Marriage of Ostler & Smith (1990) 223 CA3d 33
In Re Marriage of Weiner (2003) 105 Cal. App. 4th 235
If you or your spouse or domestic partner have student loans, and you’d like to discuss whether they’re separate or community debt, schedule a consulting session.