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Saying "I do" means sharing your life with someone. Sometimes, that also means sharing their debts. Although you and your spouse are not legally responsible for student loans you took out when you were single, marriage can still impact your student loan repayment plan and your eligibility for tax breaks.
Can a Partner's Student Loans Affect Your Credit?
Although you and your spouse share finances, you do not share a credit report. You each have individual files, so even if your partner has spotty credit, marrying them won't lower your score. But it could hurt your chances of qualifying for a loan together, since their score will influence lenders' approval decisions and the interest rate you're offered.
Additionally, if you cosign on a loan together, that account will impact your credit. If either of you wants to refinance existing student debt on a shared loan, or one of you cosigns on a loan for the other to go back to school, you will both be responsible for the debt. Any late payments or delinquencies will bring down your score.
Therefore, you may want to take a hard look at your finances together before making such a decision. Will you be able to afford the loan payments as a married couple? If you lose your job, is your partner's income enough to cover the monthly loan installments? Assuming one of you is going back to school in pursuit of a higher-paying job, how likely is it that you'll be able to quickly land a position that warrants taking on new debt? It's important for both of you to understand what you're signing on for and how it might impact your credit opportunities in the future.
Marriage May Affect Your Student Loan Repayment and Interest
If you're on an income-based repayment (IBR) plan for federal student loans, your monthly payments may increase when you get married. IBR plans are calculated based on your household size and income so, depending on your filing status, the government may factor your spouse's salary in when determining how much you can afford to pay.
You're required to recertify your IBR plan each year, and your monthly payments may change based on your previous year's income. Assuming that you and your spouse both earn income, your payment may rise after you're married. However, the amount can also drop if you become a single-income household, due to job loss or one of you leaving the workforce to raise children. You can also request assistance or a new repayment plan if your income is reduced long-term.
So, your newly increased payments won't necessarily be high throughout your marriage. But if you and your partner experience an increase in income due to promotions at work or taking on higher-paying jobs, you can expect your monthly student loan payments to rise accordingly.
Your household income also affects your ability to deduct student loan interest on your federal taxes. If you are married and file jointly with your spouse and your combined income is $170,000 or higher, neither of you will be able to claim the student loan interest deduction. You can claim the full deduction if your household income is $140,000 or less. If you earn between $140,000 and $170,000, you may be eligible for a reduced tax benefit.
Will You Be Responsible for Student Loan Debt After Divorce?
Assuming the debt is only in your spouse's name, you will likely not be responsible for the debt after a divorce. But again, if you cosigned a student loan or a refinance loan to streamline your spouse's student debt, you are obligated to make the payments—even if your divorce decree says otherwise.
If your name is on the loan and your ex-spouse fails to pay, you'll still be legally responsible for coming up with the money. Should the loan could become delinquent and ultimately go into default, your credit score will be damaged, as well as your ex-spouse's.
The only way to be absolved of that responsibility is to be officially released from the debt, whether that means talking to your creditor about having your name taken off the account or your spouse refinancing a new loan in their name. A divorce decree does not release you from debts you held jointly with your former spouse, regardless of what you've agreed to in your settlement. If the decree specifies that your ex is responsible for a debt, you will be affected if they fall behind on payments.
Additional Ways Marriage Can Affect Your Credit
Your spouse's student loans will not affect your credit as long as the debt is in their name only. And your credit file doesn't change simply because you got married, since you and your spouse continue to have individual credit files. None of the accounts either of you opened prior to getting married will affect one another's scores for better or worse.
However, marriage can affect your credit in other ways:
- Cosigning loans: As noted above, you're responsible for any loans you cosign with your spouse. If you're sharing loan payments, you'll want to be certain that you can each afford the monthly installments to avoid falling short or being late, either of which can negatively impact your credit.
- Sharing a credit card: Because joint credit cards are rarely offered today, many couples share a card by having one spouse apply and then adding the other as an authorized user on the account. The account will show up on both of your credit reports, but only the primary account holder is ultimately responsible for making payments. Using a card together can be a great way to practice money management and to accrue rewards such as travel points for a future vacation. But it can also hurt your credit score if your spouse charges large purchases that you can't afford to pay off as a couple, or if the primary account holder misses a payment. Learn more about how to manage credit cards as a couple.
- Budget management: Maintaining a balanced budget as a couple is key if you want to avoid taking on more debt than you can handle. If your partner is good with money and accustomed to a budget, you can reinforce each other's financial discipline and plan for your expenses together. If your partner tends to overspend, however, you may find yourselves relying on credit cards or loans to cover your costs. Without a plan for paying those off, you might run up high balances or start missing payments, which are two major factors in your credit score.
Whether you're concerned about your individual student debts or your ability to qualify for a mortgage or other financing in the future, it's a good idea to talk about money with your partner before you get married. Understanding how much debt you each carry, and your expectations about whether you'll pay it together or individually, can help you create a solid strategy for managing bills and working toward shared goals.
If you both create an Experian Boost™† account, you can add utility bills and streaming subscriptions to your credit files, allowing your on-time payments to be counted toward your credit scores powered by Experian. You'll both also have access to free credit monitoring and alert features so you can track your progress and share your results with each other.
The important thing is that you communicate with one another and that you are on the same page about all aspects of your financial lives, ‘til debt do you part.