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How Marriage Affects Your Student Loans

When you get married, you become legally bound to your spouse. However, saying “I do” does not necessarily mean dealing with your partner’s student loans. When you have made a decision to get married while still being college students, you should realize that you are responsible for your own loans that you took before marriage. Nonetheless, marriage and debt are interrelated notions as your newly molded family life may affect your taxes, loan payments, purchases, and financial situation as a whole.

How Are Student Loans and Marriage Connected?

1. Your payment per month could increase

As a federal loan borrower, it is possible for you to opt for one of the four income-driven plans in order to reduce your monthly payments.

  • The first plan entitled “Revised Pay as You Earn” determines payments of married borrowers on the basis of their loan debt and adjusted gross income. Such option, as a rule, leads to an increased monthly payment.
  • However the rest of the plans, in particular, “Income-Based Repayment”, “Pay as You Earn” and “Income-Contingent Repayment” predetermine separate payouts of spouses based on their own income.

2. There is a possibility of losing the student loan interest reduction

The student loan interest deduction enables you to deduct even approximately $2,500 of student loan interest that was paid during the last tax year from the total sum of your taxable income. However, if the total sum of earnings of you and your spouse is more than $160,000, you will not get the deduction.

3. Your financial situation might be affected by your spouse’s payments

In case you are the undersigned of your spouse’s private student loan, you are legally bound to repay it if your spouse is not able to do it. What is even worse, the loan will appear on your credit report as well. Thus, it will negatively impact your legibility to take a new debt or credit.

4. Your spouse may want to help you with repaying student loans

If your spouse and you decide to chip in student loans repayment, think of writing an agreement with the main terms and conditions outlined. Unless it is verified by a lawyer, it is not an official document; however, it will definitely help you avoid different controversial issues and arguments in the future (especially in such situations as a divorce).

5. You might hold responsibility for debt even after divorce

When you get married, your loans remain your own, but if either of you has got some loans while in marriage, they might be subject to state property rules even when you decide to divorce. To avoid such unpleasant situations with debt after divorce, you can create either a prenuptial or postnuptial agreement.

As you see, marriage in college years also involves much responsibility, especially concerning student loans. Therefore, if either you or your spouse has some loans, you should agree on how you will deal with them while being married. Will you choose to be legally responsible for each other’s loans or only for your own ones?

July 6, 2017
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