Those two little words signify big changes — a longtime commitment and the beginning of a new phase as two people merge their lives.
But when you add student loans to the mix, things can get more complicated.
According to a survey on marriage and debt by the National Foundation for Credit Counseling, 37 percent of respondents said they wouldn’t marry someone until their debt was paid off.
But 46 percent said they’d marry someone in debt and work to pay it off together, and 10 percent said they’d marry someone in debt but wouldn’t help pay their debt.
No matter which camp you’re in, there are several things you should know about student loans and marriage before you tie the knot.
1. How much debt are you bringing to the table?
Hopefully, by the time you’ve started to talk about building a life together, you know how much student loan debt each of you has.
If not, it’s important to lay it all out there: How much debt are you bringing to the relationship? If one person has student loan debt and the other doesn’t, it might cause friction in your relationship.
If you both have student loan debt, it can be tough to manage, and it might affect your financial milestones, such as when you buy a house or start a family.
No matter the case, as a married couple, you’ll need to tackle your finances together, including debt. Couples need to be transparent about how much debt they have and come up with a plan together to pay it off.
2. Your income-driven plan may change
If you’re on an income-driven repayment plan for your federal student loans, getting married could affect your payments.
If you file your taxes as “married filing jointly,” your income and that of your spouse will be combined. As a result, your Income-Based Repayment bill could go through the roof.
Plus, if you’re reporting joint income, you might not be eligible for certain income-driven plans.
Why? To qualify for Income-Based Repayment or Pay As You Earn, your monthly payment must be less than what it would be under the Standard Repayment Plan.
So, while marriage might reduce your tax bill, you could be losing out on some student loan benefits.
One option is to file your taxes as “married filing separately,” which typically reduces your student loan bill on an income-driven plan compared to filing jointly.
Another option is to consider Income-Contingent Repayment (ICR), which doesn’t have an income eligibility requirement. However, it’s important to look at the big picture to see if it makes financial sense.
According to the Federal Student Aid website, “Under the ICR plan, your payment is always based on your income and family size but will usually be higher than payments under the IBR and Pay As You Earn plans and in some cases could be higher than the amount you would pay under the 10-year Standard Repayment Plan.”
If you’re concerned about the financial implications of student loans and marriage — and it’s wise to be — consult a tax specialist or financial expert to decide what’s best for your situation.
3. Your spouse could be responsible for your loans
In certain situations, your spouse could be responsible for your student loan debt. While all federal loans and some private loans offer a death discharge if the borrower dies, some private loan lenders might not. So be sure to read the fine print.
If you go back to school and your spouse co-signs your loan, he or she will be legally responsible for your debt if you fail to make payments.
Even without co-signing, your spouse might be liable for your student loans. This is the case if you take out a student loan while you’re married and live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin).
Your spouse also might be responsible for your student loans if they are in default and you have no wages to garnish.
4. Not every lender allows you to refinance your student loans jointly
If you want to refinance or consolidate your student loans and those of your spouse into one convenient payment, you might be disappointed by your options.
You cannot pursue consolidation for your federal loans as a couple — only as individuals. The same goes for refinancing student loans with other banks.
Getting married can be a wonderful and logical next step for couples, but it’s important to evaluate how managing student loans and marriage will work. Before you enter into a legal union, you’ll want to know how student loans will affect your financial union as well.
Look at the big picture, read the fine print, and come up with a plan to pay off debt together. You’ll have a greater chance at happily ever after that way.
Ben Luthi contributed to this article.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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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 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
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% – 5.87%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|