Discuss Your Strategy
While some couples simply combine their money when they married, others may choose to keep some aspects separate. Either strategy can provide a range of results. If you file a joint federal tax return, for example, reporting your combined income, your monthly payment in an income-based repayment plan for a federal loan may increase. However, there are additional financial advantages to filing your taxes jointly that may make it your best decision.
Spouses are normally not liable for any student debt accrued by the other spouse prior to their marriage.
Regardless of how you and your spouse want to handle your money, you must both be on the same page in terms of your general saving, spending, and debt-management methods. Paying more or less than your partner, taking time off, returning to school, changing jobs, and/or providing for children can all complicate matters. So speak about these difficulties and attempt to come up with a strategy that works for both of you.
If you’re having trouble figuring things out, try seeking objective guidance from a certified financial planner (CFP). Your bank may also provide free financial planning advice, albeit it may try to direct you toward its own financial products. Of course, Investopedia and other credible websites provide a wealth of free loan repayment information.
Paying Off Student Debt Strategies
Whether you have student loans or other types of debt, such as credit cards, the steps below can help you prioritize and pay them off quickly.
Pay off the debts with the highest interest rates first. Regardless of who owes what, focusing your efforts on the loans with the highest interest rates will minimize your overall family payments.
Make regular payments, no matter how modest. Even if you only pay the minimal amount required, making regular payments can keep you in good standing with your loan business and may provide you leverage if you wish to negotiate your payments. The amount you pay is important, as is demonstrating that you are a consistent and trustworthy customer.
Pick up the phone if you can’t afford the payments. There are frequently other repayment choices available in addition to the conventional 10-year payment plan. Again, talking with your lender will earn you far more than simply disappearing from the map. You will not be the first or last couple to face financial difficulties. It should be noted that there are specific choices for repaying federal student loans or even having a debt erased.
Obtaining Student Loans After Marriage
Unless you co-signed for it, neither you nor your husband are accountable for any student loan debt incurred before to marriage. However, if one of you takes out a new debt after getting married, both of you might be in trouble.
As a result, it’s critical that you understand all of the conditions of any loan deal you could contemplate in the future. Though the legislation differs by state, there is a possibility that you will be held accountable for your spouse’s student loan debt. This might occur if the loans were made during the marriage (and depending on whether any of the funds were utilized for living costs) and you divorce or your spouse dies. If just your spouse’s name is on a loan in a common-law state, you may not be responsible; in a community property state, you may be.
In general, federal debts are not transferred to a surviving spouse in the event of death, but private loan debt is frequently accrued during the marriage and/or if the surviving spouse acts as a co-signer on the loan.
If you’re thinking about refinancing your student loans with a private lender to receive a cheaper interest rate, be sure you’re aware of any government safeguards you or your spouse may lose as a consequence.
Furthermore, even if you aren’t liable for your partner’s debt, it might come into play whenever you apply for credit jointly, such as a shared credit card or a house mortgage in both your names.
Even if the initial loans were taken out before marriage, consolidating loans may make couples accountable for each other’s obligations.
Couples preparing to marry may consider a prenuptial agreement that specifies who is accountable for certain debts accumulated during the marriage in the event of a divorce. Though a prenuptial agreement is not considered romantic, it is a legal instrument that may assist protect you and your spouse from unanticipated financial consequences. Are you already married? Postnuptial agreements, which can be legally binding, also exist. Just make sure you hire a local family law attorney who can assist you in negotiating an arrangement that will stand up in court.
There is no one-size-fits-all marital debt plan, just as no two marriages are alike. When it comes to student debt, like with other major financial issues, it’s critical that you and your potential spouse discuss openly and try to reach an agreement. This might also be a strong indicator of how you’ll approach future financial difficulties jointly once you’ve completed this big life step.