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.
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