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What to do before getting married: student debt

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Student loan debt can be the biggest financial problem facing young adults today. Almost 70% of recent college graduates have student debt and like tuition fees and other costs continue to rise, having to borrow money to get a degree is often unavoidable.

Although outgoing student loans for undergraduate or graduate studies it’s usually just about the person who graduates and possibly their parents, figuring out how to repay those loans when you’re married is another story.

Here are tips to help engaged couples plan ahead for student debt management.

Key points to remember

  • Evaluate what you owe each and how you plan to manage your finances.
  • Develop a debt management strategy.
  • Before consolidating student loans, compare the implications of doing so while you are still single versus after marriage.
  • Take advantage of an income payment plan, but be aware that this can impact your taxes if you file jointly.
  • Consider a prenuptial or postnup contract to clarify liability for debts incurred after your marriage.

Determine where you fit (both)

Many graduates with debt do not know exactly how much they owe or how much their loans are. interest rate are, or even their repayment schedule. The first step is therefore to assess your debt. Make a list of what you owe and to whom you owe, and familiarize yourself with the interest rates and repayment terms for each loan.

Talk about your plan

While some couples just merge their finances when they get married, others may decide to separate parts. Either approach can have a variety of results. If you drop a joint federal income tax return the list of your combined income, for example, your monthly payment in an income-based repayment plan for a federal loan could increase. However, declare your taxes jointly with others financial benefits that could still make it your best option.

Spouses are generally not responsible for student debts incurred by the other spouse before their marriage.

Regardless of how you and your spouse intend to manage your finances, you both need to be on the same page when it comes to your overall savings, spending and money management strategies. debt. Having or earning more or less than your partner, planning time off, going back to school, changing careers and / or providing for the children can complicate matters further. So discuss these issues and try to come up with a plan that both of you are comfortable with.

If you have trouble sorting it out, consider consulting a certified financial planner (CFP) for impartial advice. Your bank may also offer free financial planning assistance, although they may try to direct you to their financial products. And, of course, plenty of advice on repay loans is available for free on Investopedia and other reputable websites.

Strategies for repaying student debt

Whether it’s student loans or other types of debt, like credit card, the following actions can help you prioritize and repay them effectively.

  • Pay off loans at the highest interest rate first. No matter who owes what, targeting your efforts on the highest interest rate loans will lower your overall payments as a family.
  • Make consistent payments, no matter how small. These regular payments, even though they are only the minimum amount owed, will keep you in good standing with your loan company and can give you leverage if you want to negotiate your payments. The amount you pay is important, as is showing that you are a consistent and reliable customer.
  • If you can’t afford the payments, pick up the phone. There are often many repayment options available beyond the traditional 10 year payment plan. Again, communicating with your lender will go much further than dropping the card. You won’t be the first couple to go into debt, and you won’t be the last. Note that there are special options for federal student loan repayment or even have a loan canceled.

In response to the economic crisis that began in 2020, the Department of Education suspended interest and monthly payments on student loans held by the federal government until January 31, 2022.

Getting into debt after marriage

Neither you nor your spouse are responsible for any student loan debt that accrued prior to your marriage, unless you have co-signed for it. However, if one of you takes out a new loan after getting married, both spouses may do so.

For this reason, it is essential to know all the terms of any loan deal that either of you might be considering in the future. Although the law varies from state to state, you may be responsible for your spouse’s student loan debt. This could happen if the loans were made during the marriage (and depending on whether some of the money was used for living expenses) and you divorce or your spouse dies. In a common law state, you cannot be responsible for a loan if only your spouse’s name is on it; in a community ownership status, maybe you are.

Generally speaking, federal loans do not pass through to the spouse upon death, but private loan debt is often incurred during the marriage and / or if the surviving spouse was a co-signer on the loan. If you are considering refinance student loans with a private lender to get a lower interest rate, make sure you understand any federal protections that you or your spouse could lose as a result.

Plus, even if you’re not responsible for your partner’s debt, it can come into play any time you apply for credit together, such as a shared credit card or a home loan in both of your names.

The loan consolidation could make the spouses responsible for the debts of the other, even if the original loans were taken out before the marriage.

Couples who are considering getting married may want to consider a prenuptial agreement which stipulates who is responsible for what debts incurred during the marriage, in the event of a subsequent divorce. Although a marriage contract is not considered romantic, it is a legal tool that can protect you and your spouse from unintended financial fallout. Already married? Postnuptial agreements also exist, and can be legally binding. Just be sure to hire a local family lawyer who can help you negotiate a deal that will hold up in court.

The bottom line

Just as no two marriages are the same, there is no single marital debt strategy. When dealing with student debt, as with other major financial decisions, it is essential that you and your future spouse communicate honestly and try to agree on a course of action. It could also be a good overview of how you will tackle other financial challenges together after making this important transition in your life.


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