Student loans do not have to be a barrier in the marital relationship
Is the spouse responsible for student loans?
Many married couples believe that “what’s mine is yours” also applies to student debt? Fortunately, the answer is no, at least not when it comes to legal responsibility for debt in marriage.
Debts that exist prior to marriage, including student loans, are considered “individual property” and remain the responsibility of the partner who incurred them. The other partner cannot be forced to pay these debts.
A clear case is if you co-signed student loans with your partner. It doesn’t matter whether you took out those loans before or after the marriage or whether you are the co-signer or the primary borrower. You will be equally responsible for these debts.
However, matters can become more complicated if you or your partner take out individual student loans after getting married.
The details of who owns student loans obtained during marriage vary from state to state, as each state has its own laws regarding what is considered community property. Student loans acquired during marriage may be considered community property and bear shared responsibility if you are in a state that treats community property as jointly owned.
Note: If you have a complicated situation regarding student debt or have specific questions about how the community property laws in your state affect student loans, consult a lawyer. They can provide you with the best comprehensive and specific advice for your case according to local regulations.
Do your partner’s loans affect your credit score?
Another common concern is how student loans and marriage affect your credit score. When you get married, you continue to maintain a separate and individual credit report from your partner. Your credit history or credit score will not be affected by your partner’s debts or credit history just because you are married. Therefore, if you have student loans, you do not need to worry about negatively impacting your partner’s credit history. These student loans will not be listed on your partner’s credit report.
The exception to this is if you both have joint loans or joint accounts, including student loans co-signed together. In this case, these jointly owned debts will appear on both of your credit reports, along with the payments on these loans. To avoid any negative impact on your credit score, make sure you both keep track of these debts and that they are paid on time.
Will my student loan payments change after marriage?
If you have private student loans, the costs of these monthly debts will not change after marriage. This also applies to federal student loans that are not income-driven, like the standard 10-year repayment plan.
However, income-driven repayment plans (IDR), like those available on federal student loans, determine monthly costs based on the borrower’s income and family size, rather than on the size of their debt. When married, these key factors may change, along with your monthly payments.
Specifically, an IDR plan may use your combined income with your partner to calculate monthly payment amounts. See below for when this will happen and when it will not:
- If you are married and file joint tax returns, your combined income will always be used to calculate monthly payments.
- If you are married and file separate tax returns, IDR payments will be based solely on your individual income.
- The exception is the REPAYE plan (Revised Pay As You Earn), which uses combined income regardless of your tax filing status.
Note:
How couples choose to file tax returns affects more than just the monthly payments on an IDR plan, including eligibility for certain tax credits and overall tax liability. Make sure to balance all considerations before deciding whether to file taxes jointly or separately.
How Will Student Loans Affect Our Family Financial Situation?
Apart from the tangible worry about student loans and marriage, you and your partner will also need to address how the debt impacts your partnership.
First, conduct a complete review of this debt together: list the balances, types of student loans, interest rates, and monthly costs. Discussing the details of student debt can help both of you understand the situation better.
From here, you can discuss how these student loans affect your options regarding merging finances as a couple. For example, do you want to tackle this student debt together? Or will the partner who owes the student loan take full responsibility for the payments?
Regardless of the decision you make, these student loans will impact your family financial situation and shared goals. Bring up this topic and see if there’s a good opportunity to update your student debt strategy to improve your financial standing.
If you have a shared goal of getting out of debt, for example, you can devise a plan to pay off student loans faster. Current payments may be unsustainable – you can discuss how to adjust your budgeting or reduce student loan payments to manage them better.
Note: There may be an emotional aspect to this student debt, whether it’s feelings of shame, resentment, frustration, or even indifference. Work through these emotions to ensure student debt isn’t a source of conflict or disruption in the relationship.
Managing Student Debt to Maintain Your Marriage Stability
As you manage these loans, talk to your partner about how financial matters affect your feelings toward each other.
Student loans can be burdensome, but the financial stress from this debt doesn’t have to reflect on your marriage. By proactively working together to handle your student loans, you can find an arrangement that enhances both your financial situation and your relationship.
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Sources:
– TD Bank. “TD Bank Survey Finds Americans Spend More Than 20% of Their Take-Home Pay on Student Loan Debt, Impacting Their Long-Term Financial Health.”
– Cornell Law School Information Institute. “Marital Property.”
– Sallie Mae. “Student Loan Cosigner Responsibilities.”
– California Courts. “Property and Debt in a Divorce or Legal Separation.”
– Experian. “New Spouse’s Old Debt Won’t Hurt Your Credit Score.”
– U.S. Department of Education. “Something Borrowed: How Marriage Impacts Your Student Loans.”
– Federal Student Aid. “Income-Driven Repayment Plans Questions and Answers: Married Borrowers.”
Source: https://www.thebalancemoney.com/student-loans-and-marriage-4779237
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