Marriage is a life-long commitment that comes with a multitude of new responsibilities as you merge your life into one with your partner.
While most people may not automatically think about their student loan debt when it comes time to say “I do”, it is important to know the effect that marriage can have on your student loan obligations.
In a 2016 Consumer Reports nationally representative survey, it was found that 12 percent of Americans have delayed marriage because of their student debt.
Regardless of whether you would avoid marriage prior to paying off your student loans, there are several things you should keep in mind about student loans and marriage prior to taking the leap.
1. Your Income-Driven Repayment Plan Might Change
If you are currently enrolled in an Income-Driven Repayment plan for your federal student loans, getting married could have an impact on your monthly student loan payment.
If you and your spouse file your taxes and “married filing jointly,” the monthly amount due on your loans could skyrocket as a result of your spouse’s income now being treated as your income, too.
And, if you and your spouse combined make enough money to increase your monthly payment on an Income-Driven Repayment plan past what you would pay under the 10-Year Standard Repayment plan, you will be disqualified from enrolling in Income-Based Repayment plan at all.
2. Joint or Separate Tax Filing – Which is Better?
Married couples have the choice to either file their taxes jointly or separately.
Filing jointly often results in a lower tax bill, while filing separately typically leads to a lower monthly student loan payment if you are on an Income-Driven Repayment plan.
There are certain valuable tax benefits that can only be available if married couples file jointly, such as the American opportunity tax credit, the lifetime learning credit and the student loan interest deduction.
Deciding whether to file jointly or separately is an important decision that will depend on the financial situation and needs of each couple, and it is likely something that should be discussed with a tax or financial advisor prior to making any decisions.
3. It May Be Harder to Reach Financial Goals
Starting a new cohesive life together while burdened with student loan debt can make it difficult to achieve major financial milestones like purchasing a home and starting a family.
44 percent of individuals who took out student loans to pay for their college education reported having to cut back on their day-to-day living expenses in order to pay their monthly student loan obligation.
28 percent of individuals delayed purchasing a home, and thirty-seven percent delayed saving for retirement due to their high student loan burden.
Before running into these issues as a new married couple, it’s a good idea to sit down and be open and transparent with your partner about your student loan situation and to determine a budget and plan for the future.