Abstract
Abstract The dissolution of a marriage generally requires the division of community property. The issue addressed in this paper is how to treat the situation in which one spouse (the student) obtains an educational degree financed with community funds and leaves the marriage with the potential for enhanced earnings. The other spouse (the working spouse) leaves the marriage having helped finance the student spouse's degree, but has no return of future income from the community funds. The courts, in general, have been reluctant to view an educational degree as community property subject to division. Some states do allow for the community funds to be reimbursed for the cost of the educational degree. This paper develops a method for deriving the correct level of compensation. If compensation is restricted to just the reimbursement of costs then the level of compensation will be below the correct level. Using the implied internal rate of return as a rate of reinvesting funds will also yield a level of compensation below the correct level. Using an interest higher than the internal rate can provide the correct level of compensation but may be inadmissable in court.
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