If you attended college or your future spouse did, you almost certainly have to deal with student loans. According to the Federal Reserve Bank of St. Louis, in 2016, 46% of newlywed couples had student loan debt, which was three times the proportion of couples who had debt in 1989.
Depending on when you took out the loans and where you live, what happens to student loans when you get married But for all borrowers, getting married can affect your eligibility for certain payment plans and tax deductions, as well as your future credit eligibility.
7 Common Questions About Student Loans and Marriage
If you’re getting married, you might be concerned about how it will affect your finances, particularly if your spouse has a sizable amount of debt from student loans. If so, the following information should help you before saying “I do”:
Does Marriage Impact My Payments If I’m on an Income-driven Repayment Plan?
Getting married can affect your payments if you have federal student loans and are enrolled in an income-driven repayment (IDR) plan.
Your payments under an IDR plan are calculated as a percentage of your discretionary income. Your income could be higher and your payments could go up if you and your spouse both work.
If you file jointly, the IDR plans will calculate your payments based on your combined income. Most of the plans—income-contingent repayment, income-based repayment, and Pay As You Earn (PAYE)—will only use your income to determine your payment amounts if you file your tax returns separately.
The one exception is Revised Pay As You Earn (REPAYE). REPAYE takes your spouse’s income into account when calculating your taxes, even if you file them separately.
How Does My Spouse’s Student Loan Debt Affect My Credit?
Unless you co-signed a loan with them, your spouse’s debt won’t typically have an impact on your credit. Your credit score will be affected if you co-sign a student loan and your spouse is late with payments.
Even if you didn’t co-sign for your partner’s loans, getting married can still have an impact on your ability to obtain other types of credit. The lender will typically consider your combined income and debt-to-income (DTI) ratio when you apply for credit as a couple, such as when you try to get a mortgage together. Having a high DTI could prevent you from receiving a loan.
Is a Spouse Responsible for Student Loans Incurred After Marriage?
Depending on where you reside, you may or may not be liable for student loans that your spouse took out after you got married. Most states only hold the signatory to the loan agreement responsible for debt incurred during a marriage. However, you are jointly liable for the debt if you reside in one of the community property states, which include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
Can Married People Jointly Refinance Their Student Loans?
Refinancing your student loans can help you to simplify payments, lower your interest rate, and lower your monthly payments. If you and your spouse both owe money on student loans, you might be wondering if you can refinance your debt and combine it to benefit from your spouse’s better credit or income.
Few lenders offer refinancing for married couples. However, the majority of private lenders allow partners’ spouses to co-sign loan applications. As a co-signer, you’ll share responsibility for the loan. If you are financially stable and have good credit, you can help your spouse qualify for a better rate than they could on their own. However, as was already mentioned, if your spouse is unable to make payments, you will be liable as a co-signer.
Am I Still Eligible for the Student Loan Interest Tax Deduction?
With the student loan interest deduction, you can write off up to $2,500 in interest paid on student loans, whichever is smaller.
However, there are income limits. High incomes from either you or your spouse may cause your combined incomes to exceed the threshold for the student loan interest tax deduction.
If your modified adjusted gross income (MAGI) is between $70,000 and $85,000 ($140,000 and $170,000 if you’re married and file a joint return), the deduction is gradually phased out. If your MAGI is $85,000 or more ($170,000 or more if you file a joint return), you are not eligible for the deduction.
Will Getting Married Affect My Financial Aid?
If you intend to return to school, your marital status may affect your eligibility for financial aid.
Although your marriage alters your dependency status on the Free Application for Federal Student Aid (FAFSA), you are still eligible for federal Pell Grants and student loans.
Even if you live with your parents and depend on them financially, if you get married you are no longer eligible for federal financial aid.
When deciding how much financial aid you can get as an independent student, the government takes into account your household’s total income. Couples with higher incomes may not be eligible for financial aid plans like Pell Grants or subsidized loans that are intended for students from low-income families. The higher student loan borrowing limits for independent students, however, are available to you.
Will I Have to Pay My Spouse’s Loans If We Get Divorced?
Divorce is the last thing a newlywed wants to consider. But just in case, it’s a good idea to be aware of how debt is managed in both good and bad times.
Loans obtained after getting married are typically regarded as marital debt and will be divided equally in the event of a divorce. If you reside in a state that recognizes community property, the debt will be divided in half and your responsibility for loan repayment will be shared.
Unless you co-signed the loan, you are typically not responsible for the debt if your spouse took out the loans before you got married. Even after your divorce is finalized, you will still be liable for the debt if you co-signed for your spouse’s loan.
Repayment Strategies to Help a Partner Pay Off Student Loans
These methods can help you and your partner pay off your student loans faster if you both have debt:
List all of the loan balances and interest rates you and your spouse have using the debt avalanche strategy. Continue to pay the minimum amount due on each of them, but put any additional funds you have toward the account with the highest interest rate. Put the payment toward the loan with the next-highest interest rate once that one is settled.
You’ll save more money over the course of the repayment plan and pay off your debt faster by concentrating on the most expensive debt first.
If possible, pay more than the minimum required each month. Even small extra payments add up.
Imagine you had student loans totaling $35,000 with a 10-year repayment period and a 5% interest rate. With those terms, your payment would be $371 per month. If you upped your payments by $25 a month, you’d pay off your debt nine months earlier and avoid accruing $815 in interest.
You could save $1,500 by increasing your monthly payments by $50, which would result in a 17-month loan repayment schedule.
If you have student loans with a high interest rate, you can refinance them to get a lower interest rate or a longer repayment period.
However, think twice before refinancing federal student loans. You won’t be able to benefit from federal loan benefits like income-driven repayment plans, loan forgiveness, or federal forbearance because they will turn into private loans.
If you have federal student loans, your interest is set to 0% until at least September 30, 2021, and payments are suspended. Refinancing your federal loans will disqualify you from this benefit. You’ll have to start making payments, and the interest on your loan balance will start to accumulate.
Loan Repayment Assistance Programs
You might be eligible for a loan repayment assistance program depending on where you live and what you do for a living. For example:
Visit your state education agency and your field’s professional association websites to see if there are programs in your area.
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Kat Tretina is a freelance writer based in Orlando, FL. She specializes in assisting people with debt management and education financing.
For Forbes Advisor US, Rachel Witkowski serves as the assigning editor for mortgages and loans. Washington, DC-based Rachel has more than ten years of experience reporting on financial news for publications such as American Banker, The Wall Street Journal, and Bankrate. For revealing employee discrimination at a government agency and how the 2008 financial crisis affected Florida banking and immigration, she has won numerous national and state awards. The Forbes Advisor editorial team is independent and objective. We receive money from the businesses that advertise on the Forbes Advisor website to help fund our reporting efforts and to keep providing this content without charge to our readers. This compensation comes from two main sources.
What happens if I marry someone with student loan debt?
In most cases, getting married to someone who has student loan debt won’t make you responsible for their debt. Only the borrower who signs the promissory note is legally obligated to pay back the debt, according to the agreements for both federal and private student loans.
Does student loan affect relationship?
With high monthly student loan payments, either one or both partners will have less money to put toward living expenses. As a result, the couple might have to settle for a less spacious apartment or home, travel less, and put off having children. They might disagree about how to pay off the student loans as well.
Would you marry someone with a lot of debt?
Despite having a poor credit history, a person can still make a great spouse. But it does imply that your marriage might face some difficulties, such as having less money to spend or finding it more difficult to achieve your other financial objectives.
Would you date with student debt?
The majority of those polled (61%) expressed that dating someone with a typical amount of student loan debt would cause them to be somewhat or very concerned. One in five (18%) people claimed that they had previously decided against dating someone because they was in debt. Debt makes for awkward dating conversation.