What to Do Before Marrying: Student Debt

Student loan debt may be the biggest financial issue facing young adults today. Research shows that 54% of the class of 2021 who earned a bachelor's degree have student debt, owing an average of $29,100. As tuition and other costs continue to rise, having to borrow money to earn a degree is often unavoidable.

Although taking out student loans for undergraduate or graduate school typically involves just the person earning the degree and possibly their parents, figuring out how to pay off those loans when you're married is another story. Here's some advice to help engaged couples plan ahead for managing their student debt.

Figure Out Where You (Both) Stand

Many grads with student debt don’t know exactly how much they owe, what the interest rates are, or even their repayment schedule. So the first step is to size up your debt. Make a list of what you owe and to whom you owe it. Then make sure you familiarize yourself with each loan's interest rates and repayment terms.

Talk About Your Plan

Though some couples simply merge their finances when they marry, others may decide to keep some parts separate. Either approach can have a variety of outcomes. For example, your monthly payment in an income-based repayment plan for a federal loan could increase if you file a joint federal tax return and list your combined income; however, filing your taxes jointly has other financial benefits that might still make it your best option.

No matter how you and your spouse intend to manage your finances, both of you must be on the same page about your overall saving, spending, and debt-management strategies. Owing or earning more or less than your partner, planning to take time off, going back to school, switching careers, or providing for children can complicate matters further. So talk through these issues and try to arrive at a plan that makes you both comfortable.

If you’re struggling to sort things out, consider consulting a certified financial planner (CFP) for some dispassionate advice. Your bank may also offer free financial planning assistance, although it might try to steer you toward its financial products. And, of course, plenty of advice on paying off loans is available for free on Investopedia and other reputable websites.

Strategies for Paying Off Student Debt

Whether it's student loans or other kinds of debt, such as credit cards, the following moves can help you prioritize and pay them down efficiently.

• Pay off the highest-interest loans first. No matter who owes what, targeting your efforts to the loans with the highest interest rates will reduce your overall payments as a family.
• Make consistent payments, no matter how small. These regular payments, even if they’re just the minimum amount due, will keep you in good standing with your loan company and may give you leverage if you want to negotiate your payments. The amount you pay matters, as does showing that you are a consistent and reliable customer.
• If you can’t afford the payments, pick up the phone. There are often many repayment options available beyond the traditional 10-year payment plan. Again, communicating with your lender will get you much further than dropping off the map. You will not be the first couple to struggle with debt, nor will you be the last. Note that there are special options for federal student loan repayment or even having a loan forgiven.

Taking on Student Debt After Marriage

Neither you nor your spouse is liable for any student loan debt the other accrued before you got married unless you happened to co-sign for it; however, if one of you takes out a new loan after being married, both spouses could be.

For that reason, it's essential to know all of the terms in any loan agreement either of you might consider in the future. Though the law varies from state to state, there is a chance you may be liable for your spouse’s student loan debt. This could happen if the loans were granted during the marriage (and depending on whether any of the money was used for living expenses) and the two of you divorce or your spouse dies. In a common-law state, you may not be liable for a loan if only your spouse's name is on it but you may be in a community property state.

Generally speaking, federal loans are not passed onto a spouse in case of death, but private loan debt often is incurred during the marriage or if the surviving spouse served as a co-signer on the loan. If you’re considering refinancing student loans with a private lender to get a lower interest rate, make sure you understand any federal protections that you or your spouse may lose as a result.

What's more, even if you aren't responsible for your partner's debt, it can come into play any time you apply for credit together, such as for a shared credit card or a home mortgage in both your names.

Couples planning to marry may want to consider a prenuptial agreement that stipulates which person is responsible for which debts incurred during the marriage, should you later divorce. Though a prenup may not be considered romantic, it is a legal tool that can help protect you and your spouse from unexpected financial fallout. Already married? Postnuptial agreements exist, too, and can be legally binding. Just be sure to get a local family law attorney who can help negotiate an agreement that holds up in court.

The Bottom Line

Just as no two marriages are the same, there is no one-size-fits-all marital debt strategy. When dealing with student debt, as with other important financial decisions, it's essential that you and your future spouse communicate honestly and try to agree on a course of action. This could also be a good preview of how you'll tackle other financial challenges together after you've made this important transition in your lives.