Getting Married With Student Loan Debt? Here's What You Need to Know

Outstanding student loan debt in America sits at a staggering $1.48 trillion (August 2019).^{1 )}People are carrying much of this debt into a marriage which can impact them for decades after graduation. A recent survey even showed that 12% of people with student loans delayed getting married because of it.²

Whether you’re one of those people who have thought of delaying your nuptials or you’re marrying into debt, below are a few facts that you should be aware.

#1: Your Marriage Status Can Affect Your Monthly Payments

If you’re paying back federal student loans using an income-driven student loan repayment plan, how you file your taxes (jointly or separately) could have a major impact on how much you’re obligated to pay back monthly.

There are four types of income-driven federal repayment plans:

Revised Pay As You Earn Repayment Plan (REPAYE Plan)
Pay As You Earn Repayment Plan (PAYE Plan)
Income-Based Repayment Plan (IBR Plan)
Income-Contingent Repayment Plan (ICR Plan)³

Your tax filing status impacts these repayment plans. For example, some plans look at your combined adjusted gross income (AGI) only if you are filing jointly, while others may look at your combined AGI regardless of how you file. With a combined AGI, your payments could be higher than when you were filing as a single.

When it comes to deciding the most efficient filing option for you and your spouse, consider consulting a tax professional. In some cases, the tax credits or deductions you miss out on by filing separately outweigh the higher monthly debt payments.

#2: You May Not Be Legally Liable For Your Spouses Debt

If your partner took out federal student loans before your marriage, in most cases you are not responsible for these loans. If your partner took out private loans, it could depend on the policies of the lender.

However, if you co-signed for the loan before your marriage, you probably are responsible for the loans if your spouse defaults. In addition, if he/she took out the loans after your marriage, in some states you could be liable as these are considered community property. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.⁴ The law can be complicated when it comes to who’s responsible for what, especially if a divorce is involved.

#3: You & Your Spouse Cannot Consolidate Your Student Loan Debt

Between 1993 and 2006, the Department of Education granted joint consolidation loans to married couples, allowing them to combine their student loan debt and making both parties liable for the debt - even in the event of a divorce.⁵ This had some benefits, but ultimately had many downsides including:

Leaving a spouse responsible for the other’s debt in the case of a divorce or separation
Spouses losing the ability to defer payments (such as in the event of unemployment) unless both spouses qualified
One partner is unresponsive or unwilling to pay, leaving the other responsible
Limiting eligibility for utilizing income-driven repayment plans

As a result, a bill was introduced on May 14, 2019 called the “Joint Consolidation Loan Separation Act.” It will allow couples who have previously consolidated their loans to again legally separate their debt.⁶ As of December 2019 it has yet to be passed.

Getting married is an exciting milestone for all families, and it’s one that should bring about joy and celebration. But as you transition into married life, the debt you’re bringing into the marriage shouldn’t be ignored. Be honest with your partner about how much student loan debt you’re facing, and research your options together to build a plan of action moving forward.