Student Loan Debt Affects Ability to Pay Alimony

Redden v. redden, 2020 UT App 22 (filed February 13, 2020). Student loan debt incurred during the marriage impacts a payor’s ability to pay alimony, even if the payments are in deferral temporarily.

The trial court declined to allow Spencer’s student loan payments as monthly expenses because it determined that the expense amount did not reflect the marital standard of living; and therefore excluded it as  an expense when determining his ability to pay alimony.

However, on appeal, the appellate court found that “[a] payor spouse’s debt obligations (even those pertaining to student loans) are recognized needs fairly affecting the payor spouse’s ability to provide alimony. See Willey v. Willey, 866 P.2d 547, 551–52 (Utah Ct. App. 1993) (instructing the court on remand that once it reallocated a marital debt, it should then “consider [the] debt when it reexamine[d] the alimony award on remand, because [the] debt has a direct bearing on” the recipient spouse’s ability to meet her own needs and the payor spouse’s ability to provide alimony); see also Connell v. Connell, 2010 UT App 139, ¶ 12, 233 P.3d 836 (”An adequate analysis of the factor regarding ability to pay must do more than simply state the payor spouse’s income. The court must also consider the payor spouse’s needs and expenditures, such as housing, payment of debts, and other living expenses.” (cleaned up)); Rehn v. Rehn, 1999 UT App 41, ¶ 10, 974 P.2d 306 (same).

The court did not include additional findings with respect to the student loans or further explain its decision to disallow them. Without more, we are unable to discern the steps by which the court reached this determination, particularly where the only evidence presented at trial is that the student loans were obtained during the marriage.

Based on this evidence, Spencer’s student loan payments seem to be an expense consistent with the marital standard of living. The evidence demonstrated that the parties’ marital standard of living included incurring debt to pay for education, even if repayment of that debt had been temporarily deferred. See Rule v. Rule, 2017 UT App 137, ¶ 15, 402 P.3d 153 (explaining the general rule that “alimony should be based upon the standard of living the parties established during the marriage,” which “requires a court to determine the parties’ needs and expenses as an initial matter in light of the marital standard of living rather than, for example, actual costs being incurred at the time of trial”).

Further, Spencer was assigned responsibility for the entire student loan debt, which, given its size, would affect Spencer’s ability to provide alimony for a number of years. He explained that within two months of the trial he would be required to begin making monthly payments of $374 on the debt. And there was no suggestion from the court during the trial or in its findings that it did not consider Spencer’s account of the debt to be credible. Indeed, there was no evidence before the court suggesting that the loan obligation was not legitimate or that Spencer would not be required to shortly begin repaying it on a monthly basis for a considerable period of time. See Anderson v. Anderson, 2018 UT App 19, ¶ 32, 414 P.3d 1069 (explaining that anticipated monthly expenses are proper to factor into an alimony needs analysis where they reflect the standard of living established during the marriage); Willey, 866 P.2d at 551–52 (concluding that the trial court should consider a marital debt when it reexamined alimony, as it had “direct bearing” on the parties’ needs and resources).

Thus, the evidence before the court suggested that Spencer’s student loan debt was a legitimate obligation—one incurred during the parties’ marriage—that, within two months of the trial, would become a regular expense directly affecting Spencer’s ability to pay alimony. Without more we are unable to trace the steps through which the court determined that the impending student loan payments were not expenses based on the marital standard of living. See Paulsen, 2018 UT App 22, ¶ 17; Oldroyd v. Oldroyd, 2017 UT App 45, ¶ 11, 397 P.3d 645 (vacating the district court’s ruling with respect to a property division where this court was unable to trace the steps through which the district court reached its conclusion). We therefore reverse the court’s ruling on this issue, remanding to provide the court the opportunity to reconsider its decision to disallow the expense in light of the preceding discussion and to enter adequate findings supporting the ruling it makes.

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