Student loan debt is something of an elephant in the room for couples nowadays, because it’s not fun or easy admitting just how big the burden is and discussing finances sometimes causes anxiety for both people involved. If you have a small student loan to pay back or you’ve paid off your schooling altogether, it can be tricky navigating issues like marriage when your partner has a significantly higher student loan debt burden.
However, many personal finance experts agree that debt shouldn’t be a make or break issue for a loving relationship.
Mistakes to Avoid with Student Loans and Marriage
While some couples decide to avoid marriage altogether, there are many ways to make student loans and marriage work. And, student loans and marriage can work as long as you avoid the following mistakes:
1) Not Disclosing Finances to Each Other
Lack of communication when it comes to finances can be disastrous for a relationship. It’s not the loans that become the issue; it’s the lack of transparency about the amount and the couple’s approach to paying them off in a timely manner.
To avoid miscommunication or arguing about money before and after marriage, it’s important to lay everything out on the table and organize your finances before the wedding. This may take a few hours or a few weeks; it doesn’t matter how long it takes you as long as you remain open and honest with each other and tackle every detail.
A common problem for the partner with the higher student loan debt load is not knowing exactly how much they have, how much they’ll have to pay, and how they’ll pay it off. The uncertainty can cause stress and resentment for the partner with little to no student loan debt, unless you both have a solid plan for paying it off. Consider these questions during the organizational phase of your engagement:
- How much money is owed altogether (both partners)?
- How will you pay this money off? Are there income-based repayment plans available to you?
- Does one partner make more money and is willing and able to help pay down more of the principal on the student loans?
- What are your monthly living expenses together? How much can you both afford to put towards student loan payments each month?
- What resources are available if you think you might default on a student loan? If default is inevitable, how can you protect the person in the relationship who has less debt?
2) Having a Lavish Wedding
Did you know the average cost of a wedding is over $31,000? That’s a crazy amount, especially when you do a cost-benefit analysis and realize how much of your student loans you could have paid off with that money. Obviously weddings should be special occasions that will create life-long memories, but you don’t need an expensive wedding to attain those goals.
Instead, aim for a cost-effective wedding by trimming your guest list, choosing a more affordable (but still gorgeous!) venue, creating your own invitations and favors, and looking for other ways to cut the costs of your special day without sacrificing quality.
3) Expecting a Higher Standard of Living Right Away
All too often, folks assume that once you’re married you have instant access to two incomes, which means you’ll be buying new cars and signing your first mortgage in no time. However, when you marry someone with significant student loan debt, you’ll have to adjust your expectations for post-married life.
Instead of saving up for your first home together, you may have to spend a few years putting every extra penny towards student loan payments. Lowering the principal as much as possible is crucial to paying off the loans sooner, but it will hamper other savings goals – mortgage, new car, retirement, etc. – along the way. If waiting a while for your own place doesn’t bother you, then don’t stress.
But another thing to consider is starting a family. Many studies on Millennials find that people with student loans are waiting longer to have kids so they can lower their debt burden and save up enough money for health care costs associated with pregnancy and birth, as well as clothing, cribs, diapers, and other items kids need in their daily lives. Some couples are choosing not to have children for financial reasons, but if you are determined to have kids with your spouse, then you’ll want to be prepared.
With the average cost of raising a child from birth to 18 years old being over $245,000, this means you’ll need a stable, decent-paying job (for one or both spouses) and management monthly debt payments to make it financially feasible.
4) Opening a Joint Account
Just because you get married under the eyes of the law and share a last name doesn’t mean you have to share all your finances too. There are ways for married couples to manage finances separately, which avoids the risk of one spouse being held liable for the other’s debts.
Luckily, you aren’t responsible for your spouse’s student loan debts if you didn’t co-sign them, and their debt won’t ding your credit history, even if you share a last name now. Avoiding joint checking accounts is a good way to divide the financial burden.
However, when it comes to credit, either the spouse with better credit will have to sign for the loan or credit card on their own, or they’ll co-sign for the spouse and risk getting higher interest rates as a result of unbalanced credit histories.
As you can see, marrying someone with a large student debt load isn’t an impossible dream. It takes careful planning, communication, and lifestyle accommodations, but ultimately this teamwork and organization can help you overcome the student loans and enjoy life with your significant other.
What do you think? Is it a mistake to marry someone with a lot of student loan debt? Can student loans and marriage work?