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.
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 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.
© 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% – 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|