When it comes to getting married, you may be saying “I do” to more than just love. Bringing student loan debt into the marriage can add another level of complexity to your relationship.
Should you pay off your debt as a team or keep the payments separate? More importantly, is your spouse responsible for debt acquired before or during the marriage? Read on to find out.
How to approach debt as a married couple
When thinking about how to approach debt as a married couple, consider how you’re managing your finances altogether. Typically, there are three ways married couples approach their finances:
- Merging finances — what’s mine is yours
- Completely separate, individual finances
- His, hers, and ours — having joint funds for bills you share, while still maintaining a personal account
Looking at how you manage your overall finances can give you a clue about how you might want to tackle your debt together. If you have merged your finances, then you will be tackling student loan debt together. This can be great to help build momentum and get out of debt faster.
If your finances are separate or you take a his, hers, and ours approach, you may want to also keep your debt obligations separate. In other words, whoever got into the debt is responsible for paying it back.
That doesn’t necessarily mean that your spouse can’t or won’t help you with paying off debt. For example, under this model one spouse might pay the majority of rent and bills while the other focuses on debt repayment.
Some people believe that when you’re married everything should be done as a team. If that works for you, go for it!
But not all couples or situations are the same. The key is to communicate with your spouse and come up with a plan together that serves both of you. Get on the same page when it comes to paying off debt, because you’re in this together.
Is my spouse responsible for debt I incurred?
Whether your spouse should help pay off your debt is something only you can decide together. But legally, is your spouse responsible for debt that was acquired before or during the marriage?
“In most instances, a spouse will not be held responsible for student loan debts unless they cosigned for the loan,” says Matt Alden, a bankruptcy lawyer focusing on student loan issues.
While you may still tackle your student loan debt together as a team, your spouse likely isn’t legally responsible for your debt.
However, if your spouse cosigned for your loan, that’s a different story. “Co-signing a student loan creates a legal obligation that means the spouse can be the subject of collection activity, debt lawsuits, judgments, or garnishments if the spouse who borrowed the loans defaults on repayment,” says Alden.
Marriage is complicated — and so is the law
If your spouse didn’t cosign your loan, then they’re not legally responsible for your student loans. That’s the easy answer, but like marriage, the law is complicated and there are certain situations where your spouse could be responsible for debt you incurred.
If you take out student loans during your marriage and live in a community property state, your spouse could be liable for your debt.
According to the legal website NOLO:
“In community property states, most debts incurred by either spouse during the marriage are owed by the ‘community’ (the couple), even if only one spouse signed the paperwork for a debt. The key here is during the marriage. So if you incur a debt, such as a student loan, while you’re single, and then get married, it won’t automatically become a joint debt.”
Alden notes that it’s even more nuanced than that. “Student loans are generally treated differently than other types of debts, even in ‘community property’ states where a spouse may be held responsible for debts such as credit card bills or a car loan even when the spouse’s name isn’t on the account,” he says.
If you took on federal student loans, it’s unlikely your spouse will be responsible for paying them back, even in a community property state. However, if you have private student loans, your spouse could be responsible for your debt.
“Where the scenario can become tricky is when the student borrows private loans to pay for tuition and other educational expenses and lives in a community property state,” says Alden.
The law can vary state by state, so there is no simple answer. “It really depends on the law in an individual state and whether it makes an exception to community property rules for debt incurred to pay for education,” says Alden.
“Most community property states do [make an exception], but there may be some places where a spouse can be held responsible for repayment of private student loans incurred during the marriage even if the spouse didn’t cosign the loan,” he adds.
What if you divorce?
While no one gets married thinking that they will divorce, the stats don’t lie. Approximately 40 to 50 percent of people that marry end up divorced. In most cases, if you acquired debt before the marriage, your spouse will likely not be responsible for the debt should you part ways.
But if you took out student loans during your marriage, it gets a little more complicated. “Not all courts are consistent on this issue, but it is certainly possible for the non-borrowing spouse to be ordered to pay at least a portion of the debt pursuant to a divorce decree,” explains Matthew T. Donohue, lawyer and owner of Mid Shore Law.
“Especially in situations where the loan also paid living expenses, or the non-borrowing spouse benefitted from the increased income from the spouse’s degree for a substantial period of time,” Donohue explains.
If you’re wondering “Is my spouse responsible for my debt,” the answer really depends on your particular situation and what state you live in.
In most cases, your spouse likely isn’t legally responsible for your debt, but things can change depending on the type of loans you have, whether your student loan debt was acquired before or during the marriage, and if you live in a community property state.
There’s no black and white answer, but one thing is for certain. If you want to live happily ever after, talk about your student loan debt and come up with a plan of action together to get them gone — so you don’t have to worry about any of these potential scenarios!
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 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% 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.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 6.23%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|