Incomes Growing Faster than Debt in US
Anyone considering marriage must consider the long-term effects of their partner’s financial risks, as well as their own. For example, getting married can affect the value of loan payments and any tax breaks that result from loans. This rule applies to student loans as well.
Any couple preparing for marriage should first consult a professional to determine what effect student loans will have on their financial future.
The Amount of Student Debt
It’s essential for partners to disclose the amount of student loan debt they are bringing into the relationship. Knowing this information helps married couples understand how to plan for their financial future.
Marriage May Affect the Ability to Deduct Student Loan Interest
With the student loan interest deduction, taxpayers can deduct up to $2,500 of their student interest rate payments from the prior tax year. Married couples wishing to take advantage of the tax credit must file joint tax returns.
Anyone earning more than $160,000 is unable to take advantage of this discussion.
Spouses May be Responsible for Each Other’s Student Loan Payments
When someone acquires student loan debt before marriage, he or she remains the responsible party for those arrears. Any student loans initiated during the marriage are the responsibility of both spouses. If a spouse co-signs on the student loan, they are legally responsible for its payment. A postnuptial agreement will help to avoid legal battles over student loan debt in the event of a divorce.
It May Be Difficult to Consolidate Student Loan Payments
One of the benefits of student loan consolidation is having a convenient loan payment plan. However, very few student loan refinancing banks allow this. ‘Purefy’ is one of the only student loan refinancing banks that offers a loan consolidation program for couples. This type of loan will take into consideration the income of both spouses. If one spouse has a higher credit rating, that helps lower the interest rate of the student loan.
An Increase in Student Loan Payments
Anyone on an income-driven loan repayment plan may see an increase in their loan payments. By filing taxes as ‘married filing jointly,’ the income of both spouses is combined, making it look like the borrower is making more revenue. As a result, the student loan monthly payments will increase.
It’s no secret that marriages can crumble under financial stress. Understanding how student loans will affect people after marriage will help couples plan their financial future. The Illinois debt relief lawyers at Benveniste Law Offices can assess debt issues of those married or looking to get married and help ease debt issues through proven effective negotiation strategies. Contact us today for a free case evaluation.
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