There are personal and financial implications to consider when marrying someone with student loans, though this post will focus only on the latter.
The following is a shortlist of frequently asked questions about the combination of student loan debt and marriage along with answers that should help to clear up any misconceptions you may have on the topic.
Do existing student debts become shared debts?
The short answer to whether existing student debts become shared debts after marriage is no.
Any debt that is brought into a marriage remains the sole obligation (legally speaking) of the individual who signed for it.
Will one partner’s student debt impact the other’s credit?
Once again, any debt that one partner brings into the marriage will remain his or hers. And, as such, it won’t have any impact on the other’s credit.
Even after marriage, each spouse will retain an independent credit profile. Only when you apply for a joint account will activity show on both parties’ credit reports. So, to reiterate, your spouse’s student loans won’t show on your credit report, nor will your student loans show on his or hers.
Of course, if your spouse has a poor credit profile or a lot of student loan debt, it may impact your ability to jointly secure a mortgage. And this is certainly something to consider when thinking about your shared financial future.
How do marriage (and a larger household income) affect income-based repayment plans?
Since income-based repayment plans are based on your income as stated on your federal tax return, a larger household income can impact your monthly payment obligation.
However, married couples have two options when choosing how to file their tax returns. They can file as (1.) married filing jointly or (2.) married filing separately. By filing separately, it is likely that you’ll lower your IBR obligation, since your student loan provider will factor in only your adjusted gross income when determining your monthly payment. However, you may forgo other benefits afforded to couples that file joint tax returns. According to NOLO, by filing separate tax returns you may become ineligible for the following benefits:
- Child and Dependent Care Credit
- Earned Income Tax Credit
- Student Loan Interest Deduction
- Hope or Lifetime Learning Educational Credits
So, to sum up, when student loans are involved, you should think about both the personal and financial impact that existing debt can have on a marriage. However, you can rest assured that existing student loan debt won’t become shared debt or show up on both partners’ credit reports after marriage. While a higher household income does have the potential to increase monthly IBR obligations, couples can choose to file their taxes separately in order to limit exposure to increases.