Marriage can affect your student loan repayments, your loan-related taxes, and even your ability to chase other financial goals. Getting married does not lift the responsibility of repaying your student loan. In other words, you may need to consider how marriage affects your student loans.
Getting married does not mean both parties agree 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 newlywed 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. 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, changes may be made to your student loan interest deduction eligibility. This deduction allows you to deduct interest paid on your student loan up to $2,500 during the tax year. You can enjoy this deduction if you fall below the modified adjusted gross income limit. After getting married and filing a joint tax return, there will be an increase in the modified adjusted gross income interest deduction.
However, whether this affects your student loan or not depends on your partner’s income. Having a high household income after marriage may cause you to not be eligible for deductions. If your partner has a low annual income, you may be eligible for deductions.
Credit Scores
Unless you co-sign, 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, but it does the opposite if there’s a delay in payment.
Financial Aid
When your marital status changes, your federal financial aid has potential. After getting married, you are considered independent, even if you still financially depend on your parents or live under their roof. When you become an independent student, FAFSA no longer considers the financial information of your parents in determining your financial needs.
They determine your financial needs through your 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 allow borrowers to refinance their student loans with their spouse after marriage. This process includes taking out a new loan with a private lender to cover the current loan. Unfortunately, refinancing a federal student loan causes you to lose access to federal benefits such as income-driven repayment terms and federal forbearance.
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.