Love and Money: How Marriage Can Derail Your Debt Repayment


As Valentine’s Day approaches, love is on everyone’s mind. But if you’re considering walking down the aisle soon — and you also have student loan debt — you may find yourself wondering how that debt might impact your relationship.

Does getting married affect student loans?

In many situations, the answer is yes. Here’s how:

1. Increased payments under some income-driven plans

If you’re a swingin’ single and on an income-driven repayment plan, your payments are based on your income (obvi).

But let’s say your future spouse is a high earner and you are not. If you file your federal income taxes jointly after you tie the knot, your cumulative income (yours and your spouse’s) will be used to determine your monthly payment amount under the following plans:

  • Pay As You Earn (PAYE)
  • Revised Pay As You Earn (REPAYE)
  • Income-Based Repayment (IBR)
  • Income-Contingent Repayment (ICR)

Now, according to the Federal Student Aid Income-Driven FAQs, if you both have federal loans, then your individual payments will be proportional to the total amount you and your spouse owe. However, they won’t be proportional to each of your incomes.

Additionally, other personal debts (including private student loans) aren’t a factor in determining monthly payments for federal plans.

Additionally, if your cumulative income is high enough that you no longer meet the income requirements for IDR plans, then your monthly payments could rise to what they would have been under the Standard Repayment Plan (for PAYE and IBR) or potentially even higher (for REPAYE or ICR).

Ouch. Particularly if one or both of you were holding out for student loan forgiveness, that’s a pretty big wrench to throw in the works. Romantic, huh?

2. Married filing separately doesn’t always help

Okay, so filing federal income taxes jointly clearly makes student loans and marriage complicated. No sweat — you’ll just file separately, right? Unfortunately, under REPAYE, your cumulative income will be used to determine your monthly payment amount even if you file your federal income taxes separately.

There’s also another issue with filing your taxes separately if you’re married, and it has to do with your tax form 1098-E.

If you meet the income requirements, then you can take an above-the-line deduction if you paid at least $600 in student loan interest, reducing your taxable income by that amount. However, if you are married and file your taxes separately, then you can’t take the student loan interest deduction — even if you meet the income requirements.

That may put many married couples in the position of deciding whether to file separately in order to minimize payments under some income-driven plans, or filing jointly to get the federal income tax deduction, since you can’t do both. And again, if you’re on the most recently implemented income-driven plan, REPAYE, you can’t use the filing separately loophole at all.

3. Other financial issues rise to the surface

Getting married means you’ve decided you’re ready to start a new phase in your life. For many couples (though not all!), that means lifestyle changes that have a major financial impact — buying a house, having children, caring for aging parents, etc. Not to mention the cost of the wedding itself!

While it is possible to obtain a mortgage with student loan debt, certainly it makes the situation more complicated.

Similarly, student loan debt is leading many millennials to put off having kids.

Even if you’re able to accomplish these life goals with your debt, it can be frustrating and stressful to juggle so many financial responsibilities simultaneously. It’s not easy to enjoy reaching life’s milestones when you feel like your whole monetary situation is hanging by a thread.

So what are your other options if you’re going to be balancing student loans and marriage?

How to make student loans and marriage work

If you have federal loans, then a Federal Direct Consolidation Loan may make your monthly student loan payments more manageable. Additionally, since the new loan is also a federal loan, you’re still eligible for benefits like income-driven repayment plans, deferment, and forbearance if you meet the qualifications and/or your situation changes and you meet the qualifications at some point in the future.

However, you can’t lower your interest rates through consolidation.

Whether your loans are federal, private, or a mix of the two, refinancing with a private lender may help you lower your payments and your interest rate simultaneously. Check out our list of the best banks to refinance or consolidate student loans in 2016.

Just remember the following:

  • Refinancing a federal loan with a private lender means giving up federal benefits — permanently.
  • Refinancing or consolidation may lower your monthly payments by lengthening your repayment term. That means you’ll be making payments longer and may pay more in interest over time, especially if you’re unable to lower your interest rate.
  • If you and your (future) spouse both have student loan debt and are going the consolidation route, you can’t combine each other’s debt into one loan. Ditto if you’re refinancing with a private company. If you accrued the student loan debt prior to your marriage, it stays separate.

Following your heart is important, and no one is telling you that you should delay marriage because of student loan debt (though you may).

However, you should crunch all the numbers and consider all the options available to you before your wedding day. That way, you can be sure that you’re starting your new lives together on the firmest financial footing possible.

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