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It is hard to find someone with whom you would want to spend the rest of your life, and even harder when they come with thousands in outstanding student loans. This might be unnerving, as it signals a stressful marriage in the financial sense.
However, this doesn’t necessarily spell doom for your marriage, it just means you both need to work together to figure things out. A good way to begin is for the partners to be totally honest about how much they both owe, whether in student debt or any other type of debt.
It is only when you are both aware of the total debt on the ground that you will be able to discuss a repayment plan that will help clean the mess on the ground.
Although getting married to someone with student loan debt doesn’t automatically make you liable for what they owe, their debt could end up having an impact on your plans.
The money that should be used for beneficial projects such as buying home appliances, remodeling the kitchen, or even paying your mortgage, would be spent on servicing your partner’s student debt.
Marrying someone with student loan debt is not a bad idea, as long as you are aware of it and you both agree to come up with a plan to address it.
With that in mind, read this helpful guide on All You Need to Know When Marrying Someone With Student Loan Debt.
A Bit About Student Loans
A student loan is a sum of money that a borrower gets from a government-backed lender or a private lender including banks and credit unions, to cater for education-related expenses such as tuition, books, fees, transportation, room and board, and so on.
Student loans can be gotten from the federal government through the U.S. Department of Education. They are usually easy to qualify for and they come with lots of benefits. Their eligibility requirements such as minimum credit score and income status are less strict compared to conventional loans.
The different types of federal loans that exist include Direct subsidized loans, Direct unsubsidized loans, Direct PLUS loans, and Direct Consolidation Loans.
You could also get a student loan from private lenders banks, credit unions, and online lenders. Unlike federal student loans, the eligibility requirements of private lenders are usually stricter. They usually require a much higher credit score, which is why they can be a bit hard to secure.
Steps to Take Before Marrying Someone With Student Loan Debt
Discuss how much they owe
Marrying someone with student loan debt or any other kind of loan debt really could impact your life financially. It could hinder you from making big decisions like getting a mortgage or even getting retired at a particular age.
This is why it is crucial that you have an honest money conversation with your partner. Find out how much they owe, the interest rates charged, and their monthly payment. This way, you will be able to make a plan on how to get them (debts) settled. Sharing credit reports can help with the money conversation.
Come up with a repayment plan
After you’ve discussed how much student loan debt your partner owes, the next step is to design a repayment plan. Below are some tips to help you out:
Start by settling the high-interest debt
Peruse the debts on the ground and find out which ones have the highest interest rates. Focus on clearing them first to quickly reduce the total debt.
Be consistent with payments
Even if you can’t afford to pay a huge amount towards the debt on the ground, ensure to remain consistent with your monthly payments. This will position you as a reliable borrower who is serious about repaying their debts.
Check out the repayment options available
If you are finding it difficult to keep up with regular bills due to a massive student loan debt, your partner could go for a federal income-driven repayment plan, which allows debtors to make payments according to a part of their income.
If your partner’s student loan debt is a private one, consider refinancing it into a loan with a lesser interest rate. You could also refinance a federal student loan but you will end up losing out on federal benefits such as loan forgiveness. Refinancing usually requires a borrower to have a good credit score and income to be eligible.
If your partner’s score or income isn’t good enough, you could choose to co-sign the loan but keep in mind that you would be just as responsible for paying it (the loan) back.
Find out if marriage could raise their future payments
If your partner’s student loan debt is a federal type and they (your partner) are registered in an income-driven repayment plan, there is a chance that your own income will raise their monthly payment.
This will happen if you and your partner file your taxes jointly, as an income-driven repayment plan usually bases monthly payments on the joint gross income of a family.
Create an Emergency Savings
As sensible as it is to want to help your partner pay off their student loan debt, it is wise to have a backup first. Try to save up for a couple of months so you will have some emergency funds to fall back on if you ever find yourself in a pinch.
You can work with your partner to save in a joint account. Once this is on the ground, you can then go ahead and help them with their repayment.
Consult a Professional
If you and your partner are finding it difficult to deal with student loan debt repayment, try to employ the services of a professional who can provide answers to any legal, tax, or financial questions that you may have. They could also help you to create a budget and a repayment plan.
Consider a Prenuptial Agreement
The essence of a prenuptial agreement (prenup) is to show the status of both your finances before marriage and what would happen (to the status of your finances) in case you ever get divorced. You and your partner should consider getting a prenup before getting married, so you would have more say if the unexpected ever happens.
Tips to Help Prevent Student Loan Debt From Affecting Your Marriage
Begin executing the repayment plan
Before marriage, you and your partner had a plan on how to go about the repayment of their student loan. Now that you have tied the knot, it is time to execute that plan and start tackling the debt. Be diligent and encourage your partner to put in the same energy as you so you can get things resolved as soon as possible.
Keep an open line of communication
Due to numerous bills to take care of, it is easy to get carried away and pay less attention to your debts. Therefore, as things progress, ensure to keep on communicating about where things are and how they will proceed. Check in with each other from time to time, to ensure the both of you are still on the same page.
Keep calm and manage your emotions
It is understandable that dealing with your partner’s debt would generate a bit of friction between the two of you, especially since you would have preferred to spend that money on significant projects such as upgrading the kitchen or buying a new vehicle. This is why it is important to manage your emotions as you manage the debt on ground.
Tackle the debt together but don’t merge them
As you and your partner tackle their student debt together, resist the urge to merge their debt with any one (debt) that you might have. Although a debt consolidation or refinancing might help the both of you streamline your monthly payments and make repayment easier, merging your debts will make you liable for what your partner owes, and this may not sit well with you if you end up getting divorced.
Common Problems Associated with Student Loan Debt in Marriage
Lack of Money
If neither you nor your partner has a well-paying job that can help you pay off their student loan debt without straining your budget, getting additional jobs to help you effectively manage debt and simultaneously pay bills can raise stress levels. This is one of the common problems that you people face when they marry someone with student loan debts.
Higher monthly payments
Another problem that usually arises when you marry someone with student loan debt is that if they are on an income-driven repayment plan, filing your taxes together with theirs might increase their monthly payment significantly.
Negative feelings may arise
After agreeing to help your partner pay off their student loan debt, there will come certain times when you would feel frustrated and stressed over having to work so to help pay off a debt that you didn’t incur. You may even feel some kind of resentment towards your partner for putting you in this situation.
Incurring additional debt
In some situations, the spouse with the student debt might choose to continue their education, thereby incurring more debt. Now, the debt that they incurred before marriage is their responsibility and theirs alone. However, any loan that they take after marriage becomes a joint debt whether you co-sign for a loan or not. This makes you just as liable for the loan as your partner is.
Transfer of Debt Responsibility
Some married couples usually decide to consolidate or refinance their partner’s student loan to get lower interest rates and settle the loan quicker. As beneficial as this is, the harm there is that if the marriage ever goes south, you will both be responsible for the loan, whether you still want to help them out or not.
How to approach debt in a marriage
Before tying the knot, you and your partner must have an honest and lengthy conversation regarding how you will handle your finances, e.g. debt. This will give the two of you an idea of how to navigate your financial life without having issues.
To help out, check out these three approaches that we have come up with to help married couples deal with debt.
1. Separate finances: One way to structure your financial situation as a married couple is to leave things the way they are. Bills such as rent, utilities, mortgage payments, and so on, are shared and each person pays their portion when it is due. If you feel like this is the best approach for your marriage, go ahead and adopt it.
2. Joined finances: Another way to handle financial issues (especially debt) as a married couple is to open a joint account. This way you will be able to handle your finances as a team, and household bills will be sorted out together.
3. A mixture of both: You could also decide to adopt both approaches, i.e. keep individual accounts and also open a joint one. This way, you will pay some bills individually and others together as a team.
The most important point to keep in mind is that:
Marrying someone with student loan debt is not the worst thing in the world. It doesn’t mean your marriage will crash or suffer. It just means there is a financial issue that you would be wise to deal with head-on, rather than avoid.
As long as you are both aware of the debt on the ground, and you are on the same page about how to settle it, your marriage should be just fine.
Finally, do yourself a favour and find out All You Need to Know When Marrying Someone With Student Loan Debt.