How Marriage Affects Your Student Loans

Marriage could mean a higher student loan payment, depending on your repayment plan.
Anna Helhoski
By Anna Helhoski 
Edited by Karen Gaudette Brewer
5 Ways Marriage Affects Student Loans

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Student loans and marriage don't always go so merrily hand-in-hand — tying the knot will affect your loan payments, loan-related tax breaks and, potentially, your ability to pursue other financial goals. But marriage doesn't mean saying "I do" to another set of student loans. Each of you remains responsible for loans you took out before you walked down the aisle.

Whether you're recently married or will be soon, here's how your student loan debt might be impacted after the wedding.

1. Your monthly payment could increase

If your federal student loans are enrolled in one of four income-driven repayment plans you could end up with a higher monthly payment.

For married borrowers, one of the plans, Revised Pay As You Earn, calculates monthly payment amounts based on you and your spouse's combined adjusted gross income and loan debt, no matter how you file taxes. This usually means a higher monthly payment.

Those enrolled in any of the other plans can choose "married filing separately" on their taxes to make payments based on individual incomes. This includes the plans Pay As You Earn, Income-Based Repayment and Income-Contingent Repayment. If your spouse has federal student loan debt, the federal government does consider the amount of federal loans they have and will prorate your payment amount based on your share of the combined federal debt amount. Private loans are not taken into consideration.

If you choose married filing separately in order to avoid having your spouse's income factored into your payment, there's a catch: Filing separately means missing out on tax breaks joint filers receive.

“We run both scenarios just to see what the tax liability will be for both of them, and I have yet to find a situation that ‘married filing separately’ is better,” says Ara Oghoorian, a financial planner and president of ACap Asset Management in Encino, California. Ask your tax preparer to check your tax bill for both options.

2. You might not qualify for the student loan interest deduction

Any individual who earns less than $85,000 in modified adjusted gross income over the past year can get a student loan interest deduction. Those earning less than $70,000 can deduct up to $2,500 for student loan interest, while those earning between $70,000 and $85,000 can deduct a reduced amount.

Once you get married, the rules change. If you and your spouse together earn more than $160,000, you’ll lose the deduction. There's no way to beat the system, either — you can’t claim it at all if you file separately.

3. Your spouse’s payments could affect your finances

If you co-sign a private graduate school loan or refinancing loan, you’re legally responsible for repaying it if he or she can’t. The loan will also appear on both of your credit reports, where it could impact your ability to take on new credit or debt, such as a mortgage.

If your spouse takes out a student loan during your marriage, but can't make payments and defaults, creditors in some states can go after both of your wages and assets — or, if you file jointly, your tax refund. The federal government will also go after your tax refund for loans taken out after marriage that default.

4. You may agree to chip in on each other's payments

If you and your partner decide to help each other repay your loans, consider creating a written agreement outlining the terms. It’s not an official document unless you have it drawn up by a lawyer, but it could help you avoid arguments in the future, especially in case of a divorce if one spouse depends on the other for financial help.

But remember: “The other spouse may agree to pay on the loans of his or her spouse, but the federal government doesn’t care about that because the loans remain only in the borrower's name,” says Adam Minsky, a Boston-based lawyer specializing in student loans.

5. You may be responsible for debt after divorce

Debt you bring into a marriage typically remains your own, but loans taken out while married can be subject to state property rules in divorce. And if one spouse co-signs the other’s private student loan, he or she is legally bound to the loan unless you can obtain a co-signer release from the lender.

To avoid post-divorce legal squabbles over student debt, couples can create a prenuptial or postnuptial agreement. But these agreements have limitations.

“Too often people think it will get them out of paying the debt and it’s not going to do that,” Minsky says. “But if the couple is concerned about a worst-case scenario and have agreed to do something in private that differs from the student loan agreement, then putting that in writing would be possibly really important down the line.”

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