Student loans and marriage don’t have to be at odds. But as the student loan crisis continues to intensify, it’s crucial to recognize the impact it may have when you’re ready to tie the knot.
According to a survey on marriage and debt by the National Foundation for Credit Counseling, 37% of respondents said they wouldn’t marry someone until their debt was paid off. On the other hand, a bigger percentage of respondents — 46% — said they’d marry someone in debt and work together to pay it off.
Regardless of the approach you take, here’s what to know about student loans and marriage before you say “I do.”
1. How much debt are you bringing to the table?
2. Your income-driven plan may change
3. Your spouse could be responsible for your loans
4. Not every lender allows you to refinance your student loans jointly
As you and your partner plan your future together, it’s important to discuss financial goals. This includes past debt. If you have not had this conversation, it’s critical to lay it all out: How much debt are you bringing to the table? Avoiding this can only lead to friction later on, especially when it comes time for the financial milestones like buying a house or starting a family. The amount of debt you each have may affect the possibility of meeting other financial goals.
Couples should be transparent about how much debt they have and work together to come up with a plan to pay it off.
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 your spouse’s income will be combined into one adjusted gross income. As a result, your bill could increase significantly.
If you’re reporting joint income, you might not be eligible for certain income-driven plans. That’s because in order 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 in other ways, you could lose out on some student loan benefits.
One alternative 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. If you’re concerned about the financial implications of student loans and marriage, consult a tax specialist or financial expert to decide what’s best for your situation.
In certain circumstances, 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 cosigns your loan, they will be legally responsible for your debt if you fail to make payments.
Even without cosigning, 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 such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington or Wisconsin.
Your spouse also might be responsible for your student loans if they are in default and you have no wages to garnish.
You cannot pursue consolidation for your federal loans as a couple — only as individuals.
However, some private lenders allow couples to consolidate loans. Ask a student loan refinancing lender you’re interested in if it has a policy allowing couples to consolidate their loans and refinance them to a lower interest rate.
Getting married can be a wonderful next step for couples, but it’s important to evaluate how you’re going to manage your student loans while married. Before entering into a legal union, you should understand how student loans and debt might affect your finances.
Look at the big picture, read the fine print and come up with a plan to pay off debt together. Happily ever after is much more attainable when you’re both on the same financial page.
Jackson Wise contributed to this report.18