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When you get married, part of the fun is joining your lives together. Building a new home, developing a routine, adapting to each other’s schedules — it’s all very fresh and exciting.
But one of the toughest aspects after the wedding is figuring out how to combine your finances, especially if you have student loans.
If you both have student loan debt, you may think it’s a good idea to consolidate your loans into one big sum to make it easier to manage. But the answer to “Should I consolidate my student loans with my partner’s?” is a complicated one.
Below are some factors to consider that can affect your decision.
Love, marriage, and money
In most cases, any debt you took on before you get married, including student loans, is solely your debt after the wedding. That means your credit cards, car debt, and student loans are not the responsibility of your spouse.
Your partner is only legally responsible for the debt you run up together after you’re married. While you may decide to work together to pay down debt you bring into the marriage, your spouse is under no legal obligation to do so.
That’s important to keep in mind. You can still help each other pay down debt and build up savings, without taking on legal responsibility for your spouse’s debt from before the wedding.
Should I consolidate my student loans?
When you consolidate your debt, you take out a new loan for the balance of the total of all of your debts. If you have one loan for $10,000, another for $5,000, and a third one for $2,000, you would consolidate those into one big loan of $17,000.
Consolidating debt can be a great way to simplify and lower your monthly loan payments. While consolidating your own debt (or just your spouse’s debt) can be a smart decision, you may want to think twice about consolidating them together into one big loan.
What to consider before consolidating student loans with a spouse
First, an unfortunate fact no one likes to consider: 40 to 50 percent of American married couples wind up divorcing. Though you may beat the odds, it’s a good idea to prepare for the worst and hope for the best.
If you consolidate your loans and end up getting a divorce, the new loan amount will be a big point of contention. It’s no longer as simple as it would be had you kept the loans separate.
For example, let’s say you went to a state school and worked through college, so you had only $20,000 in student loans. Your spouse, on the other hand, went to a private school and had over $80,000 in student loans. If you consolidated your debt, the new amount would be $100,000.
In a divorce settlement, depending on the terms, you could end up being on the hook for 50 percent or more of that debt. That’s way more than you brought into the marriage, and that added debt will make it more difficult to restart your life.
Other issues to consider
Divorce is not the only problem. Even if you and your spouse are true soulmates, consolidating your student loans together is still a bad idea. Life can throw other obstacles and tragedies your way.
If your spouse dies or is permanently disabled, you may be able to get his or her loans discharged or forgiven. But if you consolidated their debt with yours, you may only be eligible for a partial discharge. Worse still, some lenders will keep you on the hook for the loans altogether as the surviving partner.
Finally, if you consolidate your loans together and one of you decides to go back to school, you may not qualify for an in-school deferment of your debt. That means you could have to keep making payments on your loans, even if you are in school.
These issues are things no one wants to think about, especially when you’re freshly engaged or married. But it’s important to think through every scenario to protect both you and your partner when deciding “Should I consolidate my student loans with my spouse’s debt?”
If you’re newly married, should you consolidate student loans? If you have good credit and don’t mind giving up the federal loan benefits, consolidating only your student loan debt alone can be a smart way to simplify things.
Your spouse can do the same with their individual debts, but consolidating their loans with yours is a risky proposition that could cost you in the long run.
If you’re interested in learning more about consolidating your loans or your partner’s, visit our roundup of top lenders.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
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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 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% 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 firstname.lastname@example.org, 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
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.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.57% – 6.98%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.80% – 6.22%2||Undergrad & Graduate||Visit Laurel Road|
|2.51% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.57% – 8.17%6||Undergrad & Graduate||Visit Citizens|