Bells will be ringing — your fiancé proposed and you said “yes!”
But before you follow up with an “I do,” consider this: If one (or both) of you brings student loan debt into the relationship, you’ll have to decide if you should tie the knot now or wait until that debt is repaid.
I know, I know. Waiting until you’ve repaid your student loan debt might seem unnecessary. Why delay your future as a couple?
Unfortunately, changing your status from single to married could have lasting implications on your financial situation if student loan debt is involved. Before you walk down the aisle, weigh the pros and cons of getting married now versus waiting until you’re free from student loan debt.
Student Loan Debt and Marriage
Does one partner carry much more debt than the other? This may become a point of contention in your marriage.
If one of you racked up $100,00 in student debt while pursuing a Ph.D., for example, but the other paid their way through college, the debt-free spouse might want to wait to enter into a marriage. In the beginning, the debt-free (or low-debt) spouse might we willing to ignore it — they’re in love, after all. They might even want to help their partner repay their loans.
But large and unequal student debts are a heavy financial responsibility and the day-to-day reality could become draining.
Both partners will need to live in a smaller home, skip restaurants and vacations, and work overtime. Will the debt-free person be okay with this frugal lifestyle? Or will he or she feel like their own financial goals are being held back?
Who’s Going to Pay?
When it comes to the matter of tackling this debt, there are several options. Should the spouse with the higher income contribute larger chunks of money? Should the spouse who acquired the debt pay more? Or should you both pay equally?
If you and your partner take the plunge into shared banking and finances, you’ll need to have a conversation about whether or not student loans will become a shared debt. You’ll also need to decide how much each spouse will contribute if you do decide to share the responsibility.
For the sake of a harmonious marriage, make those decisions before the ceremony.
Perhaps you’re not done with higher education. If you both want to continue your education with professional or grad school, who will get to earn their degree first? Will you both defer your undergraduate loans and live entirely off of your new loans? One of you may need to work to support the family.
If you decide to pursue school, will you both save up as much as possible before continuing on with graduate school? Or should you skip graduate degree debt altogether in favor of starting your career and family life?
You and your future spouse need to factor not just for your current student loans, but also any future student loans you might incur.
Income-Based Repayment Plans
Perhaps the most serious implication of student loan debt and marriage is the drastic effect it can have on income-based repayment plans.
For instance, your qualification for an IBR plan is based on based on discretionary income. Once you and your spouse combine incomes, your new discretionary income might be too high. To avoid this, you would need to file taxes separately.
For REPAYE, your spouse’s income is considered even if you two file separately. If marriage makes you ineligible for this program, you might have to consider an Income-Contingent Repayment (ICR) plan instead, which holds a higher qualification threshold and capitalizes interest annually.
Marrying Someone With Debt: Benefits of Waiting
The average wedding now costs $31,213 , according to The Knot. Even the most frugal wedding can run several thousand dollars, which is money you could devote to becoming debt-free instead.
The promise of a wedding is excellent motivation to pay off your debt. If you postpone getting married, you can restructure your repayment schedule to pay off larger amounts more quickly. Plus, you’ll be able to splurge more on the ceremony and reception.
Bottom Line? Make the Decision as a Couple
It’s time for you and your fiancé to have a serious conversation.
Don’t let the financial elephant in the room build resentment between you and your fiancé. Talking about finances can be uncomfortable, but remember that your union will be decidedly less perfect, and a lot less harmonious, if the topic of student debt is swept under the rug.
Discuss the timeline for debt repayment. Talk about whose burden it will be to bear. Learn to communicate effectively with your partner about finances before you’re legally bound. Most importantly, be open and honest with your partner before walking down the aisle.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 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 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% 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 Month/Day/Year, 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 08/21/18. 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@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 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.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing 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.
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 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|