If you’ve incurred sizable student debt or are planning to take on student loans in the future, you might be wondering how this will affect your current or future spouse. You also might be married to or are thinking of marrying a spouse with substantial student loan debt and are wondering if you would be jointly responsible for paying off that debt.
The answer depends on three factors:
- Which state you live in
- If the loans were federal or private
- If the loans were made before or after the marriage
Is Your Spouse Responsible for Your Student Debt?
If the spouse has co-signed on the student loans, he/she is legally responsible for the debt. In community-property states (AZ, CA, ID, LA, NV, NM, TX, WA, WI), if you take on a student loan while married, the spouse is liable for the debt even without co-signing.
Kansas is not a community-property state, so you would’ve had to have taken out the loan while married and living in a community-property state for that law to apply. In some cases your spouse would also be liable for your student debt if the loans are in default and you have no wages to garnish.
Federal student loans offer a “death discharge” if the borrower dies, meaning the spouse wouldn’t be responsible for the debt. Private student loans may also offer the same guarantee, but they also may not. It’s important to get clarification on your individual circumstance if you’re unsure.
Income, Taxes and Payments
Many borrowers opt for the income-based repayment plan for paying off student loans, meaning your payment is based on your current income. But if you get married, your payments could go up.
For couples filing taxes as “married filing jointly,” your income and your spouse’s income are combined, and based on the new income figure your payments could increase dramatically. Combining incomes may also take you out of eligibility for income-based payment plans altogether.
In order to be eligible for income-based plans, your monthly payment must be less than it would be under the standard repayment plan. If your combined income is too great, you would lose out on eligibility for income-based plans and would be forced to pay the standard rate.
Another option is to file taxes as “married filing separately,” meaning you and your spouse’s income remain separate and your student loan payment wouldn’t be affected. But doing this means you would then become ineligible for tax breaks joint filers would receive.
The best thing to do is speak to your tax preparer or financial expert about which is the best course of action for your situation to see which filing status makes the most sense for you and your spouse.
Living with Each Other’s Debts
Even if your spouse isn’t legally obligated to your student debt, it can affect your married life in other ways. Substantial monthly student debt payments can hinder a couple’s ability to borrow for a new home, start a family, purchase a vehicle or live the lifestyle they have planned.
Debts can cause a lot of stress on a new marriage, so it’s important to deal with and figure these issues out before getting married. You don’t want to be on the hook for your spouse’s debts unknowingly or even in the case of divorce.
Debt you incur before marriage will generally stay yours alone, but if the loan is taken out during the marriage or co-signed for, the spouse could be liable. You can sign a prenuptial agreement on who owes what, but it’s not always a guarantee that you won’t owe if the marriage dissolves. Getting your agreement in writing, though, is a good step to take nonetheless.
If you have any questions about legal issues surrounding debt and marriage, schedule a free consultation with Oswald Law at our Hutchinson offices by calling toll-free 1-800-894-5931 or by filling out our contact form on this page.
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