Money is often a major source of strife between couples. It can be difficult for long-term partners to build wealth together when one person has student loans. Marking your status as “Married filing separately” could be a better option for tax purposes, but that’s just one of the financial decisions you’ll need to make.
Perhaps you want to help your significant other pay off student loans, so you can enjoy a debt-free future together. It’s not uncommon for couples to want to combine finances with their partners, which might mean helping them pay off their debt once and for all.
However, others believe in keeping their finances separate. If their partner got into debt, it’s their responsibility to get out. Here are some points to consider on both sides of the argument so you can decide the best course of action when marrying someone with student loan:
Why you should help your significant other pay back student loans
When helping your partner pay off student loans is a bad idea
Bonus: How to file taxes with student loan debt if you’re married
Why you should help your significant other pay off student loans
As someone with $33,000 in student loan debt, I know how burdensome the numbers can feel. My husband does too, since he has more than $300,000 in student loan debt — much of it from medical school.
Even though he owes nearly 10 times more than I do, I still feel it is our debt to tackle together, and we plan on helping each other pay it off in full. After all, we decided together that he would go to medical school. I know that if we also work together to pay it off, we’ll be debt-free that much sooner.
In fact, helping your significant other pay off their student loans can have both financial and emotional benefits:
1. You achieve your goals faster
When one or both partners in a couple have debt, it holds them back from accomplishing what they really want to do together in life. Whether it’s going on a family vacation or saving for retirement, working together to overcome debt can help you achieve your goals as a couple faster — especially if one person earns significantly more income.
This can also be a wise decision if you foresee needing to take out a loan in the future for a major life event, such as buying a house together. It can be a complete win-win: both partners are able to do what they enjoy, reach mutual financial goals quickly and move on to new stages in the relationship.
2. You can strengthen your relationship
When two people enter a long-term relationship, the expectation is that they’ll work together to reach common goals. Yet money troubles are a chief cause of tension for many couples and often go unaddressed. Sitting down to have the difficult conversation about how you’ll pay off debt together can bring money-related issues to the surface and urge you to work together.
It’s also empowering to reach difficult goals together. By paying attention to spending, putting extra income toward loan payoff and concentrating on maintaining a budget, a couple can generate the spirit of cooperation and learn what two people can accomplish together.
When helping your partner pay off student loans is a bad idea
Marrying someone with student loan debt can be a challenge. Every relationship is different, and not all couples will find that helping each other pay off this obligation is the best choice. There are instances when you’re better off letting your significant other tackle this on their own.
1. You maintain separate finances
According to TD Bank’s Love and Money Survey, 55% of couples combine their money. This means nearly half (45%) of couples choose to keep at least part of their finances separate.
There’s nothing wrong with keeping separate finances in a relationship. Some people feel restricted when they have to maintain a shared budget with a significant other, or as though they can’t spend their own money as they please. It’s relatively common for couples to have separate accounts in addition to a joint account for shared expenses, such as mortgage payments and groceries.
If you’re part of a couple that likes to keep things separate, student loan debt should be no different. If you don’t expect your significant other to help pay your credit card bills or everyday expenses, you shouldn’t ask for help paying down student loan debt, either (and neither should they).
2. Your partner manages money poorly
A history of money problems is good reason to let your significant other handle student loan debt without your help. Poor financial decisions or a lack of money management skills won’t improve if you’re there to bail your partner out.
Instead, act as their biggest supporter and only give advice when asked. When it comes to reaching goals — especially money-related ones — it’s sometimes best to let a poor money manager learn the hard way and hone some personal finance skills in the process.
There are plenty of good reasons to help your significant other pay off student loan debt, as well as to stay out of it. Your decision should be based on how well your partner manages money, what you’ve agreed to as a couple and how significantly that student loan debt is impacting your lives.
Remember, the goal of any long-term relationship is to live a happy, prosperous and pleasant life together. So decide what will best contribute to reaching that goal, whether it’s by helping with debt repayment or by allowing your partner to handle it independently.
Alternatives if you don’t want to help your partner pay off student loans
There are plenty of good reasons to not help your partner pay off their student loans — i.e., you have other debts to pay off yourself or they’re not good with money. So if you’ve decided against chipping in, there are other ways for them to get assistance, if needed.
Depending on the type of student loans they have, plenty of payment options are available to help them if they’re having trouble keeping up. A deferment or forbearance will allow them to temporarily lower their monthly payments or stop making payments altogether for a limited time. They might also be able to refinance their private and federal student loans to get a lower interest rate, reduce their monthly payment or both.
Filing for taxes with student loan debt: Married filing separately or jointly?
Regardless of which option you choose, you and your significant other will have to decide together how to file for taxes. When even one person is working to pay off student loans, going with “married filing separately” or “married filing jointly” is a major tax decision you must make.
If your significant other has student loans with an income-based repayment plan, filing separately could result in lower student loan payments. However, do note that married couples who file their taxes jointly typically have lower tax bills. Therefore, opting to file separately while paying off student loans may result in a higher tax bill.
From your tax return to whether you help your significant other pay off their student loans, know that every couple is different. These are personal decisions that you’ll need to make with each other. Work together to find a solution that fits your unique situation.
Laura Woods contributed to this report.
Interested in refinancing student loans?
Here are the top 9 lenders of 2021!| Lender | Variable APR | Eligible Degrees | |
|---|---|---|---|
 | 1.88% – 6.15%1 | Undergrad & Graduate | |
 | 1.88% – 5.64%2 | Undergrad & Graduate | |
 | 2.50% – 6.85%3 | Undergrad & Graduate | |
 | 1.89% – 5.90%4 | Undergrad & Graduate | |
 | 2.25% – 6.39%5 | Undergrad & Graduate | |
 | 1.88% – 5.64%6 | Undergrad & Graduate | |
 | 1.90% – 5.25%7 | Undergrad & Graduate | |
 | 2.39% – 6.01% | Undergrad & Graduate | |
 | 2.13% – 5.25%8 | Undergrad & Graduate | |
| Check out the testimonials and our in-depth reviews! 1 Important Disclosures for Splash Financial. Splash Financial DisclosuresTerms 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. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice. To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit. Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of June 1, 2021. 2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest. Earnest DisclosuresInterest Rate Disclosure Actual rate and available repayment terms will vary based on your income. Fixed rates range from 2.59% APR to 5.79% APR (excludes 0.25% Auto Pay discount). Variable rates range from 1.88% APR to 5.64% APR (excludes 0.25% Auto Pay discount). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 36% (the maximum allowable for these loans). Earnest variable interest rate student loan refinance 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 2.04% and 5.8% to the one month LIBOR. Earnest rate ranges are current as of 6/8/2021, and are subject to change based on market conditions. Auto Pay Discount Disclosure You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. Student Loan Refinancing Loan Cost Examples These examples provide estimates based on payments beginning immediately upon loan disbursement. Variable APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 5.89% APR would result in a total estimated payment amount of $17,042.39. For a variable loan, after your starting rate is set, your rate will then vary with the market. Fixed APR: A $10,000 loan with a 20-year term (240 monthly payments of $72) and a 6.04% APR would result in a total estimated payment amount of $17,249.77. Your actual repayment terms may vary.Terms and Conditions apply. Visit https://www.earnest. com/terms-of-service, e-mail us at [email protected], or call 888-601-2801 for more information on our student loan refinance product. Earnest Loans are made by Earnest Operations LLC or One American Bank, Member FDIC. Earnest Operations LLC, NMLS #1204917. 535 Mission St., Suite 1663, San Francisco, CA 94105. California Financing Law License 6054788. Visit earnest.com/licenses for a full list of licensed states. For California residents (Student Loan Refinance Only): Loans will be arranged or made pursuant to a California Financing Law License. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104. Earnest loans are serviced by Earnest Operations LLC with support from Navient Solutions LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries are not sponsored by or agencies of the United States of America. © 2021 Earnest LLC. All rights reserved. 3 Important Disclosures for CommonBond. CommonBond DisclosuresOffered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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 0.15% effective Jan 1, 2021 and may increase after consummation. 4 Important Disclosures for Laurel Road. Laurel Road DisclosuresAll credit products are subject to credit approval. Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. 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. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com. As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount. Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate. Interest Rate: A simple annual rate that is applied to an unpaid balance. Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%. KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. This information is current as of April 29, 2021. Information and rates are subject to change without notice. 5 Important Disclosures for SoFi. SoFi DisclosuresFixed rates from 2.74% APR to 6.74% APR (with autopay). Variable rates from 2.25% APR to 6.39% APR (with autopay). All variable rates are based on the 1-month LIBOR and may increase after consummation if LIBOR increases; see more at SoFi.com/legal/#1. If approved for a loan your rate will depend on a variety of factors such as your credit profile, your application and your selected loan terms. Your rate will be within the ranges of rates listed above. Lowest rates reserved for the most creditworthy borrowers. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license #6054612; NMLS #1121636 (www.nmlsconsumeraccess.org). Additional terms and conditions apply; see SoFi.com/eligibility for details. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. 6 Important Disclosures for Navient. 7 Important Disclosures for LendKey. LendKey DisclosuresRefinancing 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 04/07/2021 student loan refinancing rates range from 1.90% APR – 5.25% Variable APR with AutoPay and 2.95% APR – 7.63% Fixed APR with AutoPay. 8 Important Disclosures for PenFed. PenFed DisclosuresAnnual Percentage Rate (APR) is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rates range from 2.89%-4.78% APR and Variable Rates range from 2.13%-5.25% APR. Both Fixed and Variable Rates will vary based on application terms, level of degree and presence of a co-signer. These rates are subject to additional terms and conditions and rates are subject to change at any time without notice. For Variable Rate student loans, the rate will never exceed 9.00% for 5 year and 8 year loans and 10.00% for 12 and 15 years loans (the maximum allowable for this loan). Minimum variable rate will be 2.00%. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. |
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