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:
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.
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.
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 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|2.99% – 6.44%3||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 6.43%4||Undergrad & Graduate|
|3.18% – 6.07%5||Undergrad & Graduate|
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1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All 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 June 23, 2020. Information and rates are subject to change without notice.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
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 May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. 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.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.19% APR (with Auto Pay) to 6.43% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 6.43% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate 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 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of June 15, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 6/15/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2020 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). 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 0.19% effective June 10, 2020.