Jumping from single life into marriage is a big change: you combine everything with your spouse, from music collections to money. Adding student loans to the mix inevitably makes things more complicated.
If you’re getting ready to get married — or are simply thinking about future possibilities — here are four things to consider about marrying someone with student loan debt.
1. How Much Debt You’re Bringing to the Table
Long before you consider sharing the rest of your life, it is essential to talk about your student loan debt. If you haven’t yet, but are thinking about getting married (or are already engaged), there’s no time like the present. Lay it all out for your significant other and be completely honest about how much debt you’ll bring to the relationship.
This is especially important when one person has significantly more student loan debt than the other, which can cause friction in the relationship down the road. And if you both have significant debt, it can delay big post-marriage milestones like buying a house or having children.
Whatever your circumstance, student loan debt is something you’ll have to attack together. By being open and honest about how much debt you have, you can better make plans to pay it off and move on with your lives.
2. Income-based Repayment Might Be Out
If you’re currently on an income-driven repayment plan for your federal student loans, you could run into roadblocks. Filing your taxes as “married, filing jointly” combines your and your spouse’s income, which can cause your payments to increase significantly or even make you ineligible for your current plan (depending on how much you make together).
You may be able to avoid this issue by filing your taxes a separately. However, this will not be an option with the Revised Pay As You Earn Program (REPAYE). You can also consider “Income-Contingent Repayment,” which does not require a specific income to be eligible. As the U.S. Department of Education Office of Federal Student Aid explains, payments are based on family size and income, but are also usually higher than IBR and PAYE programs; it’s possible for payments to end up being higher than on the 10-year Standard Repayment Plan.
To learn more about the financial implications of student loans and marriage, talk to a tax specialist or financial expert. They will be able to provide you with a more in-depth look at what might be best for your and your spouse’s specific student loan situation.
3. You Could Be Liable For Each Other’s Loans
It’s not fun to think about, but in the tragic event that you pass away early, your spouse may be responsible for your student loan debt. Some private loan lenders do not offer the death discharge available on federal loans, so be sure to read the fine print.
Further, if you go back to school, your spouse could be legally responsible for your debt if you fail to make payments. This is true if he or she cosigns your loan, or if you live in a community property state and meet certain conditions that would make your spouse responsible for your debt. And if your loans go into default with no wages of your own to garnish, your spouse might have theirs garnished instead.
4. Loans Cannot Be Refinanced or Consolidated Jointly
If you have multiple loans as a single person, it can be helpful to consolidate them into one payment. However, thanks to the Higher Education Reconciliation Act of 2005, this option is only available for individuals and not couples (which avoids the messy split-up of consolidated loans in divorce cases).
So while you can consolidate your own loans, you cannot consolidate or refinance them together as a couple — you will always have separate, individual payments.
Marrying Your Partner’s Student Loans
Beyond the social, emotional, and religious dimensions of marriage, it can also be a great financial move.
However, it’s important that couples be honest with each other about their student loans before taking the plunge. Determining how each person plans to repay his or her loans, and what will be best for the young family, is essential.
After all, you’re not simply combining lives; you are combining finances as well. Figure out what will work best for you as a couple and come up with a plan to take on your debts together. This will give you your best shot at “happily ever after.”
This is a guest post by Andy Josuweit, CEO of Student Loan Hero.