Marriage and Student Loans: Forgiveness and Repayment Options

• Your spouse isn’t automatically responsible for your student loans when you get married, but marriage can impact your monthly payments and eligibility for forgiveness programs.

• Filing taxes jointly while on an IDR plan may increase your student loan payments, but it can also provide tax benefits. Filing separately may lower your IDR payments but disqualify you from certain tax advantages.

• Marriage doesn’t directly affect PSLF eligibility, but it can impact your IDR payment plans based on your spouse’s income and student loan debt. Filing separately may keep your payments lower and help you reach forgiveness faster.

You’re getting married, and student loans are coming along for the ride. As you start your life together, you may wonder:

• Will I be responsible for my spouse’s student debt?

• How will our loan payments and repayment plans change?

• What about loan forgiveness programs and taxes?

Don’t worry. We’ve got you covered.

In this article, you’ll learn how marriage impacts your student loans, including:

• Responsibility for each other’s debt

• Income-driven repayment plans and monthly payments

• Student loan forgiveness programs like PSLF

• Tax implications and filing strategies

• Tips for managing student debt as a couple

By the end, you’ll have a clear plan for tackling student loans together. Let’s dive in!

Tying the knot doesn’t automatically tie you to your spouse’s student debt. In most cases, you’re not legally obligated to pay your partner’s loans just because you got married. However, there are specific scenarios and legal considerations you should be aware of:

Pre-marriage Loans

If your spouse took out student loans, including private student loans, before you got married, those loans remain their sole responsibility. This applies universally, regardless of the state you live in.

Example: Let’s say Amanda has $30,000 in private student loans from before marrying David, who has no student debt. Since Amanda took out the loans before marriage, David isn’t responsible for them.

Post-Marriage Loans

Student loans taken out after you’re married are typically the borrower’s responsibility, but there are some exceptions:

• Co-signing: If you co-sign your spouse’s loans, whether federal student loan debt or private student loans, you’re equally responsible for repaying the debt.

• Community Property States: Debts incurred during marriage may be considered joint responsibility in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.

• Consolidation: If you combine your federal student loan debt into a private student loan after marriage, you’re both responsible for the new loan.

• Divorce: In certain situations, a divorce agreement may require one spouse to pay the other’s student loans.

Example: If David co-signs Amanda’s federal student loan debt into a private student loan, he becomes equally liable. If Amanda takes out new loans during their marriage, those loans are typically her responsibility unless they live in a community property state or David co-signs.

Related: Are Student Loans Community Property?

State-Specific Rules and Legal Considerations

In community property states, any debt incurred during the marriage is considered shared. This means that if your spouse takes out a loan after you are married, you may be liable for it.

Example: In Texas, if Amanda takes out a student loan after marriage, David may be responsible for it because Texas is a community property state. However, if they live in a state that does not follow community property laws, David would not be responsible unless he co-signs.

Inheritance of Student Loan Debt

Federal student loans are not passed on to spouses. Private student loans also can’t be passed on to spouses, but the lender may go after the primary borrower’s estate. So although the debt isn’t being inherited, it is impacting the assets the primary borrower intended to leave for their family.

Example: If Amanda passes away, her federal student loans will be discharged, and David will not be responsible. However, if she has private student loans, the lender may seek repayment from Amanda’s estate. This means that while David won’t directly inherit the debt, it could reduce the assets and financial support he might have expected to receive from Amanda’s estate. David should review the loan agreement and state laws to understand the potential impact on the estate and his financial situation.

Managing Spousal Responsibility

To avoid potential financial surprises, it’s important for couples to:

1. Communicate Openly: Discuss your existing debts and any future borrowing plans.

2. Consider Legal Agreements: A prenuptial or postnuptial agreement can outline each spouse’s responsibility for student loans.

3. Seek Legal Advice: Consult with a lawyer who specializes in family law and student loans to understand your specific situation.

Related: Should I Pay Off Student Loans Before Getting Divorced?

When you’re married with student loans, your tax filing status can significantly impact your IDR plan choice and monthly payments.

The new Saving on a Valuable Education (SAVE) plan, which replaces the Revised Pay As You Earn (REPAYE) plan, calculates your monthly payments based on your income and family size, which are determined by your tax return.

• Filing jointly: If you file taxes jointly, your combined income and student loan debt will be used to calculate your SAVE plan payments. This could result in higher payment amount, especially if your spouse has a high income and little to no student loan debt, as it may push you into a higher tax bracket.

• Filing separately: If you file taxes Married Filing Separately, the SAVE plan will only consider your individual income and student loan debt, which are reported on your individual tax return. This can lead to lower monthly payments, particularly if you have a lower income than your spouse, as you may fall into a lower tax bracket.

• Community property states: If you live in a community property state and file separately, your loan servicer will calculate your monthly SAVE plan payment using half of your combined income, which may result in a lower monthly payment than if you filed jointly. This is because your combined income is split equally between you and your spouse for income tax purposes.

Note: Pay As You Earn (PAYE) will be phased out in July 2024. The only plans that will remain are SAVE, Income Contingent Repayment (ICR) and Income-Based Repayment (IBR).

Let’s compare the impact of filing status on monthly payments in both non-community property and community property states:

As you can see, filing separately generally results in lower monthly payments, especially in community property states, due to the way income is reported on tax returns and its impact on tax brackets.

Remember, you must recertify your income and family size annually to stay on the SAVE plan, regardless of your tax filing status.

Related: Why Can’t I Claim Student Loan Interest Married Filing Separately?

When deciding whether to file taxes jointly or separately, married student loan borrowers should also consider how their filing status affects their eligibility for tax credits and deductions related to their spouse’s student loans. Some benefits are only available to joint filers, while others have stricter income limits for separate filers.

Student Loan Interest Deduction

This deduction lets you deduct up to $2,500 of paid student loan interest from your taxable income, including interest paid on your spouse’s student loan debt.

If you’re married and file separately, you can’t claim this deduction, even if you’re the one making payments on your spouse’s student loans.

If you file jointly, you can claim the deduction if your modified adjusted gross income (MAGI) is less than $170,000 (phases out between $140,000 and $170,000).

Tip: The Student Loan Marriage Penalty Elimination Act, introduced in October 2023, aims to make the student loan interest deduction available to each spouse independently, which would benefit married student loan borrowers. While the bill has received endorsements, it hasn’t become law yet.

American Opportunity Tax Credit and Lifetime Learning Credit

AOTC and LLC help offset the costs of tuition and fees for eligible students, including your spouse if you’re married.

If you’re married and file separately, you can’t claim either credit, even if you paid for your spouse’s education expenses.

Joint filers can claim AOTC if their MAGI is less than $180,000 (phases out between $160,000 and $180,000) and LLC if their MAGI is less than $138,000 (phases out between $118,000 and $138,000).

IDR Plan Forgiveness and Tax Implications

If you or your spouse are pursuing loan forgiveness through an IDR plan, filing separately may result in lower monthly payments and more significant forgiveness, especially if your spouse has a higher income and little to no student loan debt.

But any forgiven balance under IDR plans is currently considered taxable income, which could impact both you and your spouse.

If you file separately and receive substantial loan forgiveness, you may face a higher individual tax burden compared to filing jointly.

Related: 1099-C Student Loan Forgiveness

Marriage can affect your eligibility and monthly payments for student loan forgiveness programs like Public Service Loan Forgiveness (PSLF) and IDR plan forgiveness.

Public Service Loan Forgiveness

• Forgives the remaining balance on your Direct Loans after 120 qualifying payments while working full-time for an eligible employer

• Marriage itself doesn’t impact your PSLF eligibility

• Filing taxes jointly can increase your monthly IDR payments, extending the time to reach 120 qualifying payments

• Filing separately can keep your IDR payments lower, helping you reach forgiveness faster

IDR Plan Forgiveness

• IDR plans like the SAVE plan forgive your remaining loan balance after 20-25 years of payments

• Filing taxes jointly means your combined income and student loan debt will determine your monthly payments, which can lead to larger payments and less forgiveness

• Filing separately means only your individual income and debt will be considered, potentially resulting in lower payments and more substantial forgiveness

• Keep in mind that forgiven amounts under IDR plans may be considered taxable income

Healthcare & Military Based Forgiveness

Other profession-based forgiveness routes include programs available to healthcare workers and active-service military. These programs vary widely but generally reward participation in various initiatives. Being married would not change your eligibility for these programs.

Learn More:

• Student Loan Forgiveness for Healthcare Workers

• Military Student Loan Forgiveness and Repayment Programs

Recent Changes and Considerations

• The now-defunct Biden student loan forgiveness plan had an income limit of $250,000 for married joint filers, but this plan was struck down by the Supreme Court in 2023.

• Currently, marriage typically doesn’t affect eligibility for most student loan forgiveness programs, but it can still impact your monthly IDR payments and progress towards forgiveness.

Refinancing student loans can be tempting for married couples looking to save on interest rates and lower their monthly payments. But weigh the pros and cons, especially with federal loans, before refinancing your debt.

Considerations for Private Student Loans

Refinancing private loans together may seem like a smart thing to do if it gets you a better interest rate. But in my experience as a student loan lawyer, it’s usually best for married couples to keep their loans separate.

Combining your loans through refinancing can create a financial tie that sticks around even if the relationship doesn’t. If you get divorced, this can lead to complications and conflicts over who’s responsible for the debt.

If you do decide to co-sign or refinance loans together, consider a student loan prenuptial or postnuptial agreement. The agreement should clearly state how the debt will be handled in case of divorce, including a clause requiring the primary borrower to try to release the co-signer from the loan, assuming they have the credit score and income to do so.

Refinancing Federal Student Loans

For federal student loans, refinancing with a private lender is generally not a good idea. You’ll lose valuable benefits like income-driven student loan repayment plans, loan forgiveness programs, and forbearance options. These repayment options can be a lifeline for married couples facing financial changes or pursuing careers that qualify for loan forgiveness.

The interest rate savings from refinancing federal loans privately may not be worth giving up these long-term benefits and protections.

Instead, married couples with federal loans should look into options like the SAVE Plan, or focus on strategies to pay off your loans faster while taking advantage of the flexibility and safety nets federal loans provide.

Federal student loans are borrowed individually, so they remain the responsibility of the original borrower. But what if you consolidated your loans with your spouse’s loans into a joint consolidation loan?

Your Joint Spousal Consolidation Loan is eligible for President Biden’s forgiveness programs like the IDR Waiver, the PSLF Waiver, and the SAVE Plan — but not in it’s current form.

You’ll need to wait for the Education Department to release the process to separate your loans, even if you’re not divorced.

The department releases updates on the separation process on the Federal Student Aid website. The last update said they hope to have the process implemented by the end of 2024.

1. Have honest conversations about your student loans. Discuss your individual loan balances, repayment plans, and financial goals. Schedule regular “money dates” to review your progress and make adjustments.

2. Create a budget and debt repayment plan together. Include your combined income, expenses, and debt payments like credit cards, auto loans, etc. Consider using the debt avalanche or snowball method to pay off loans faster and celebrate your wins along the way to stay motivated.

3. Look into income-driven repayment plans and loan forgiveness programs. See if you qualify for plans like SAVE that base payments on your income. Research loan forgiveness programs for your career, like PSLF or Teacher Loan Forgiveness, and understand how your tax filing status affects your eligibility and payments.

4. Consider keeping your loans separate. Avoid combining your loans through refinancing or co-signing to maintain financial independence while still supporting each other’s repayment goals.

5. Seek expert advice when needed. Consult with a financial advisor who specializes in student loans and take advantage of free resources, like StudentAid.gov, The Institute of Student Loan Advisors, or one of our student loan experts.

Managing student debt as a married couple may feel overwhelming at times, but remember: you’re not alone. By working together and staying informed about your options, you can create a solid plan to tackle your loans and achieve your financial goals.

Need more guidance? Our team of student loan experts is here to help. Book a free 1:1 call with one of our knowledgeable advisors. We’ll review your situation, answer your questions, and provide personalized recommendations to make your student debt repayment journey as a couple easier and more efficient.

Don’t let student loans strain your relationship or prevent you from building the life you want together. Schedule your consultation call today to take the first step towards a brighter financial future as a couple.

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