Getting married can change a lot about someone’s life, including their student loan debt.
Whether it’s credit scores, repayment plans or taxes, how you and your partner navigate the student loan debt conversation before marriage matters for the future of your finances.
Here’s what you should know before getting married about your student loan debt.
Paying my loans back
Any student loans taken out before your marriage are solely your debt and your future spouse isn’t responsible for repaying the loan if you can’t make payments, but their income might affect your repayment plan.
Federal borrowers on an income-driven repayment (IDR) plan who file their taxes jointly with their spouse could see their monthly payments increase with the addition of an extra income.
Borrowers who file their taxes separately from their spouses can maintain their monthly student loan payments without expecting an increase by checking “married filing separately” on their tax forms. IDR plans like Pay As You Earn (PAYE), Income-Based Repayment (IBR), Saving on a Valuable Education (SAVE) and Income-Contingent Repayment (ICR) are most compatible for individuals looking to file separately.
While filing taxes separately will help maintain your monthly payments on an IDR, it means that you and your spouse will miss out on tax benefits joint filers receive.
It’s best to contact your loan services provider before tying the knot to get an estimate of your new payment plan if you filed jointly with your spouse.
Credit scores
Your student loan debt won’t impact your spouse’s credit score and vice versa unless you all used each other as co-signers on your loans. With any co-signed loan, payments made on time or paid in full can benefit and boost the credit score of both parties, but late payments or defaulting on the loan can lower each person’s credit score.
Refinancing student loans
Federal borrowers who want to refinance or consolidate their student loans and spouses into one payment as a couple are unable to, but each partner individually can consolidate their federal loans.
However, some private lenders allow couples to consolidate their loans together for a lower interest rate. If you have a private loan, be sure to contact your lender with questions about refinancing with your spouse.
Student loan interest deduction
Any loans that you, your spouse or your dependent took out can offer you a perk during tax season with a student loan interest deduction of up to $2,500.
This deduction applies to federal and private student loans — as long as the interest on the student loans has been paid on in the past year.
However, only borrowers who make less than $85,000 in gross adjusted income qualify and if married, you and your spouse can’t make more than $170,000 jointly in order to be eligible.
Couples who file their taxes separately are still eligible to claim the student loan interest deduction.
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Borrowers are worried about the future of affording and paying back their student loans. Are you one of them? Share your story and thoughts here with Reckon.
