Marrying with Student Loan Debt: I Do or I Don’t?

U.S. borrowers hold $1.75 trillion in student loan debt. Carrying massive student loan debt can seem ubiquitous. But in truth, there are plenty of people out there who don’t have student loan debt.

And what can happen between the folks who don’t have student loan debt and the folks who do? Well, sometimes they fall in love. And decide to get married.

Many people in these relationships live happily ever after (so far — the national student loan crisis isn’t that old).

But finances can be a sticky subject in a marriage. Studies have shown that money conflict is particularly difficult to navigate. Some even indicate that money conflicts are more likely to lead to divorce.

So before you jump into a relationship saddled with student loan debt — yours or someone else’s — consider carefully whether your relationship is strong enough to handle it.

We have some tips for how to set yourself up for marital success (at least about your student loans).

Communicating with your spouse about money

If you don’t take anything else away from this article, let it be this: You and your future spouse need to have honest conversations about your existing debt, how you’ll approach debt payments, and what your future financial plans are.

Those conversations aren’t going to get any easier after you’re married, and the stakes will be higher.

In a 2009 study of married couples, researchers found that spouses’ money conflicts “lasted longer, more often covered problems that had been discussed previously, and held higher current and long-term importance to couples’ relationships.” The researchers determined that “money conflicts were more likely to persist as important issues, be mishandled, and remain unresolved.”

Oof.  

See why we want you to talk about it now? Don’t add surprise debt balances or unclear expectations to the mix. Get into the habit of having honest and respectful conversations about money now.

See: From a Ballooning Loan Balance to a Pay-off Plan

Determine how student loan debt will affect your future

If you’ve always assumed you’d buy a home soon after you married, you might be surprised when your new spouse tells you they don’t want to purchase a home until they’ve paid off their student loans — in 10 to 20 years.

Hopefully you’ve been having those honest conversations about your financial past and future. That’s the case whether you have student loans or not. But if either of you is bringing significant debt to the marriage, those discussions are critically important.

Many millennials are delaying key life events like buying a home or having a baby because of student loan debt. It’s important that you and your spouse know whether you’re on the same page.

These are important things to think about, whether you’re bringing debt into a relationship or marrying someone with debt. Say you managed to graduate with only a few thousand dollars in student loans — congratulations on that. But you’re planning to marry someone who’s carrying a six-figure debt load.

You’ll be making financial decisions from a different perspective now. You may have to size down your annual vacation plans or your house dreams. There may be more scrimping and saving than you’d envisioned for yourself.

Can you lovingly make the needed sacrifices?

And what if you’re the person bringing the six-figure debt load into the relationship? That can be a difficult position. You may feel like your student loans are a burden. You may have guilt or shame about your debt load. Can you talk to your future spouse about your feelings? Are they supportive of your efforts to pay off your loans?

Sit down with your spouse and talk openly about the future. These questions are a good place to start:

• How much debt do we have right now?
• What are our major financial goals (buy a home, save for retirement, go on a fancy vacation every year, have a baby, etc)?
• How do we want to approach debt payments — pay off as much as possible as fast as possible, just pay the minimum amount, pay more when we can?
• What sacrifices are we willing to make? What sacrifices are we not willing to make?
• What support do we need (talking with a financial advisor or a tax professional, using a budgeting app or a student loan repayment app, etc)?

Recognize that you may each have different answers to these questions, and that your answers may change over time. Allow space to think about each other’s responses, and revisit them in a few days or weeks if you need to.

See: 9 Student Loan Hacks to Help You Pay Your Debt Faster

Understand how marriage will affect student loan payments

Whether you’re the one with student loan debt, your spouse is, or you both have it, you’ll want to understand how getting married will affect your student loan repayment terms.

If you’re on a traditional repayment plan, getting married won’t affect the terms at all. You’ll keep owing exactly what you owed before.

However, if you’re on an income-driven repayment plan, marriage could make a difference.

Why?

Well, income-driven repayment plans are based on your adjusted gross income, and the federal government gets that number from your previous year’s tax return. If you and your new spouse file jointly (as many married couples do), you’ll have a combined adjusted gross income. And that number will presumably be larger than your solo income.

A higher adjusted gross income means higher monthly income-driven payments. If you both have student loan debt, the federal government may take that into account.

You could file separately, and neither of your adjusted gross income would increase for the purposes of income-driven plans. (One caveat: if you’re on Revised Pay As You Earn, that plan always takes into account both spouse’s incomes if the borrower is married — regardless of how you file.)

Of course, we’re just talking about student loan debt. How you file as a married couple has other implications, like what tax bracket you fall into and whether you can benefit from certain deductions.

Before changing your repayment plan or how you file your taxes, talk to a tax professional about what your filing options are and how they impact your financial situation as a whole.

What happens to student loan debt if we divorce?

Thinking about divorce when you’re getting married can feel kind of defeatist. Here’s hoping it’s something you never have to worry about. But if one of you is carrying a big debt load, it’s not a bad idea to at least understand the landscape.

Separating finances during a divorce can be complicated, and much of it depends on the specific laws in the state where you live.

There’s one rule that’s clear across states: Debt someone has before they enter a marriage is not marital debt. That means it’s not divided up during a divorce. It belongs solely to the person who had it before marriage — unless you have a prenup that says something different.

But if either of you takes out student loans once you’re married, your state’s laws will determine whether that’s marital debt. And it’s not always an easy answer.

Nine states are what’s called “community property states.” In those states, any assets or debts acquired during the marriage are considered marital property. The nine community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

In a simple scenario there, both parties would be responsible for 50% of all debt acquired during the marriage, student loans or otherwise.

The 41 other states are equitable distribution states, which means a judge decides what is fair. It should be noted that in any state, a couple can come to a divorce settlement agreement on their own that differs from the laws of the state.

Note that in many marriages, one spouse would have cosigned on the other spouse’s student loan. The responsibility of a co-signer doesn’t change after a divorce. That person remains responsible for the loan if the borrower goes into default — forever.

If you are getting divorced, make sure to talk with your lawyer early about the student loan debt in your relationship.

Here’s the short of it: lots of people get married with lots of student loan debt. It shouldn’t stop you from a lifetime of happiness unless you don’t communicate honestly with each other about your existing debt and your future financial goals.
Oh, and make a plan to get that student loan debt paid off. Even if it’s just using rewards dollars from your shopping purchases. Yep, that’s a thing. Get access to Shop & Pay.

Contributed by Katie Taylor.