Bells will be ringing! Getting married is a big deal, with many things to consider, including what to do if one (or both) of you has outstanding student loans. Marrying someone with student loan debt could affect your finances, so you’ll have to decide if you should tie the knot now or wait until the debt is repaid.
On the one hand, waiting until you’ve repaid your student loan debt might seem unnecessary. Why delay your future as a couple?
But unfortunately, marrying someone with student loans could have lasting impact on your financial situation. So while it’s reasonable to marry even if one or both of you has student debt, it’s important to enter into this situation with your eyes open.
Before you walk down the aisle, make sure to discuss the implications of getting married now versus waiting until the student loan debt is paid off.
Marrying someone with student loan debt
Does one partner carry much more debt than the other? This may become a point of contention in your marriage.
If one person racked up $100,000 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 before entering into a marriage. In the beginning, the debt-free (or low-debt) spouse might be willing to ignore the partner’s financial obligation — they’re in love, after all. But marrying someone with student loan debt involves sharing a heavy financial responsibility, and the day-to-day reality could become draining.
Both partners might need to live in a smaller home, skip restaurants or vacations, or possibly work overtime. Will the debt-free person be OK with this frugal lifestyle? Or will they feel like their own financial goals are being held back?
Who’s going to pay?
When it comes to marrying someone with student loans, there are several options to tackle this debt. 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 sharing the student loan debt (or not). You’ll also need to decide how much each spouse will contribute if you do share the responsibility.
As for where the law stands on this question, you’re generally not responsible for any debt your spouse took on before the marriage, while responsibility for loans borrowed after the marriage varies from state to state. Specifically, as of 2019, if you live in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin, you could be liable for any debt your partner takes once you’re married.
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 his or her 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, you’ll need to figure out how much money, if any, to save beforehand. Or you might choose to skip graduate degree debt altogether in favor of starting your career and family life.
You and your future spouse need to account for not just for your current student loans, but also any future student debt you might incur.
Income-Driven Repayment plans
One of the biggest financial implications of marrying someone with student loan debt is the effect it can have on income-driven repayment plans.
For instance, your qualification for an income-driven repayment plan is generally based on discretionary income. Once you and your spouse combine incomes, your new discretionary income might be too high.
You can generally avoid this problem by filing taxes separately, but that has downsides too, such as losing access to some tax breaks and credits. And for REPAYE, you and your spouse’s incomes are counted together regardless of your tax status, so you or your loved one would need to switch to a different plan to have the student loan payment based on just one person’s salary.
Should you pay off student loans before getting married?
The average wedding costs $33,931, according to a survey by The Knot. But even if you opt for spending just a few thousand dollars, it’s money you could devote to becoming debt-free instead.
In fact, 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.
However, if getting married is the top priority, at least make sure to discuss how you’ll deal with your education debt or your future spouse’s student loans.
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 the two of you. 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 how you’ll share the burden. Learn to communicate effectively with your partner about finances before you’re legally bound. Most importantly, be open and honest before you take the plunge into marriage.
Laura Woods contributed to this report.
Interested in refinancing student loans?Here are the top 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.89% – 6.66%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.99% – 5.64%4||Undergrad & Graduate|
|1.98% – 8.55%5||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
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1 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms 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 October 1, 2020.
2 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 September 9, 2020. Information and rates are subject to change without notice.
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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 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 7/31/2020. 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 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.
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 10/15/2020 student loan refinancing rates range from 1.98% APR to 8.55% Variable APR with AutoPay and 2.99% APR to 8.77% Fixed APR with AutoPay.