How Marriage Affects Your Student Loans – Marriage can significantly impact your student loan repayments, influence loan-related taxes, and even affect your ability to pursue other financial goals. Tying the knot doesn’t eliminate your obligation to repay your student loans; each borrower remains individually responsible for their own debt. Therefore, it’s important to consider how getting married might affect your student loan situation.
Getting married does not mean both parties say I do to their partner’s student loans. It is an exciting time of life, and one of its advantages is that it lifts your finances, including your student loans. However, marriage can affect your student loan repayment plans. Before you proceed with your marriage plans, stay aware of the changes it may cause to your student loan.
6 Ways Marriage Affects Your Student Loans
Whether you are newly wedded or you will be married soon, how marriage affects your student loans is very important to be aware of. There are some changes made to your student loans after getting married, some of which are:
Student Loans Legal Responsibility
Student loans taken before marriage are considered the borrower’s responsibility. After getting married, your partner is not legally responsible for the loan taken. They can only get involved if your loan was co-signed before marriage.
Changes in Repayment Plans
Marriage can change your federal income-driven repayment plan if your taxes are jointly filed with your partner. Each income-driven repayment (IDR) plan uses your monthly income to regulate your monthly payment for the student loan taken. Your IDR plans may rise if you and your partner work to increase your income. In cases where you decide to file separately, only your income may be considered for your repayment plan.
Tax Breaks and Adjustments
After marriage, your eligibility for the student loan interest deduction may change. This deduction allows you to deduct up to $2,500 in student loan interest paid during the tax year, provided your modified adjusted gross income (MAGI) falls below a certain threshold. When you get married and file a joint tax return. Your combined MAGI may increase, which can affect your ability to claim this deduction.
Whether you’re still eligible depends largely on your spouse’s income. If your combined household income is high, you may no longer qualify for the deduction. However, if your partner earns a lower annual income, you may still be eligible.
Credit Scores
Unless you co-signed, your credit score will not be affected by your partner’s student loan. If the co-signed student loan repayment is done punctually. It may have a good effect on your credit and does the opposite if there’s a delay in payment.
Financial Aid
When your marital status changes, your federal financial aid grants potential. After getting married, you are considered independent even if you still monetarily depend on your parent or you live under their roof. When you become an independent student, FAFSA no longer considers the financial information of your parent in the determination of your financial need.
They determine your financial needs through you or your partner’s financial information. However, this may positively or negatively affect your financial aid. If your partner’s income is higher than that of your parent, your financial needs will reduce, which causes you to lose some financial aid.
Refinancing with Your Partner
Some student loan lenders offer the option for married couples to refinance their student loans together. This involves taking out a new loan from a private lender to pay off the existing loans.
However, it’s important to note that refinancing federal student loans means giving up federal benefits, including income-driven repayment plans and federal forbearance options.
Am I Responsible for My Spouse’s Student Loans?
No, you are not responsible for your partner’s student loan if it was taken before they married you. But you may be responsible if the loan was taken after marriage, even if you didn’t co-sign the loan.
What Happens to My Student Loan if I Get Divorced?
This depends on when the loan was taken and your location. If the student loan was taken before marriage, you will be responsible for your loan if you didn’t co-sign with your partner.
However, if the loan was taken during marriage, after getting divorced, your partner may be responsible for 50% of the balance of the student loan taken, depending on the community property state.