Are you ready to tie the knot but worried about how your student loans will affect your intended spouse? Does your intended have a lot of student loan debt that you’re worried about taking on?
You aren’t alone. These days, a lot of younger people have significant financial burdens, thanks to the high cost of repaying student loans. However, student loans don’t have to be insurmountable obstacles to your happiness — as long as you and your partner plan things carefully. Here are the things you need to keep in mind.
1. Frank discussions are important.
Conversations about money troubles are often difficult for couples, but that’s a talk you need to have. Sit down with your partner and discuss the amount of debt that you’re both bringing to the table, including student loans. That can keep your marriage from imploding over hidden financial issues.
2. Do some payment planning.
One of the most critical things that you need to figure out is how your payments may change once you get married. Once you have a combined income, your income-driven repayment plan may go up. Discussing income and debts before you walk down the aisle can enable you to determine ahead of time what to expect. Using the “married but filing separately” option on your taxes can keep the payment lower but it also prevents you from taking the deductions that come with filing as a married couple.
3. Understand how student loans become joint debt.
Generally speaking, the debt you each bring into a marriage remains your own — unless you refinance. Since California is a community property state, your personal debts will likely become joint debts if either of you refinances the loans after you’re married. That could be catastrophic if you eventually divorce. Similarly, if you or your spouse go back to college after you marry, that additional debtload is likely to be shared.
It’s also a smart idea to discuss the issue with an attorney before you marry. A prenuptial agreement can help you and your spouse clearly define your expectations — and the limit of your obligations to each other — if the marriage should fail. Having a plan can help you remain friends with your spouse even if you divorce by making the division of property much easier.