Student Loans and Separation in Ontario: Who Owes What?

Many people come out of a relationship with student debt, whether it was taken on before the relationship began or while you were together. It is natural to ask whether your ex now owes part of it, or whether you will be asked to share theirs.

The answer depends on whether you were married, when the debt was taken on, and what else you own and owe. This article explains the general rules in Ontario and how debt can also come up when support is discussed.

Married or common-law: which rules apply

Ontario's property equalization system applies to spouses who are married to each other. Unmarried (common-law) partners are not spouses for the purposes of equalization.

Common-law couples are not legally required to split property acquired while living together, though they may choose a cohabitation agreement or separation agreement instead. How a student loan is treated if you were not married depends on your situation, so it is worth confirming with a lawyer.

How debts count in equalization

When a marriage ends, the spouse whose net family property is lesser is entitled to one-half of the difference between the two net family properties. Net family property is the value of all property (except excluded property) a spouse owns on the valuation date, less debts and liabilities and the net value of property owned on the date of marriage.

The valuation date is, first, the date the spouses separate with no reasonable prospect of resuming cohabitation. Debts such as credit cards, car loans and mortgages are subtracted when calculating each spouse's share. A student loan is a debt in the ordinary sense, so it is generally the kind of liability you would raise as a deduction. How a particular loan, including an OSAP loan, is treated depends on the facts, and a lawyer or accountant can confirm it.

This is not the same as splitting the loan. Equalization is about the difference between the spouses' overall net positions. A debt usually lowers the net family property of the person who owes it, which can reduce what that person owes or increase what they receive. Your ex does not usually become the borrower on your loan.

Debt from before the marriage versus during it

Timing matters. The calculation also subtracts the net value of property owned on the date of marriage. Property owned before the marriage is usually shared only for any increase in value.

For debts, the questions people usually ask are these: was the loan already there on the wedding day, how much is owing on the valuation date, and did the loan pay for something that increased in value? Your answers affect how the numbers fit together, so gather the dates and balances.

The person claiming a deduction or an exclusion bears the onus of proving it. That means statements, loan agreements and balance records are important evidence.

Student debt and support

Debt can also come up when support is discussed. Spousal support is not automatic. You may qualify if you were married, lived together as a couple for at least three years, or had a child together in a relationship of some permanence, and you show a need and the other spouse's ability to pay.

Amount and duration are set by negotiation in a separation agreement or by a judge, considering income difference, child care, age and health, and roles in the relationship. Child support looks at each parent's current and future means, capacity to contribute, age and health, and accustomed standard of living. Loan payments are part of a person's financial picture, but how much weight they receive in a given case depends on the facts. A lawyer can tell you how they may be treated in yours.

Misconduct is not part of the equation. A court making a spousal support order shall not take into consideration any misconduct of a spouse in relation to the marriage.

What to do next

Put the paperwork together early, because you will need to prove what you claim. If you reach an agreement, both partners must sign in front of a witness, and the witness must also sign. Equalization claims also have time limits: you have six years from separation or two years from the divorce being final, whichever comes first.

• Get a current statement for each student loan showing the balance.
• Find the balance on the date you were married and on the date you separated.
• Note the date of separation, since it is usually the valuation date.
• List your other debts, such as credit cards, car loans and mortgages.
• Collect income information for both of you in case support is discussed.
• Diarize the deadline for an equalization application.
• Get legal advice before signing a separation agreement.

Frequently asked questions