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First comes love, then comes marriage, then comes … combining your student loans together?

From adapting your decor to match your spouse’s taste to opening a joint checking account, married couples experience a lot of new changes to their lifestyle. Combining your finances can be the most significant — and complicated — thing you do.

If you both have student loans, you might be overwhelmed trying to manage all of them at once. You may be wondering if you can combine them into one to make things easier. While it’s definitely possible, it’s important to understand the pros and cons before submitting your refinancing application.

Can you consolidate your loans with your spouse’s debt?

When you graduated from college, you likely left school with multiple student loans, potentially with multiple lenders. Chances are, your spouse did, too. That issue can make managing your student loan debt difficult, with multiple lenders, monthly payments, and bill due dates to track.

Student loan refinancing is a process that allows you to consolidate your debt into one loan. With refinancing, you work with a private lender to take out a new loan for the amount of your current student debt. The new loan will have a different repayment term, minimum payment, and interest rate than your old ones. Going forward, you’ll have just one loan to manage.

A spousal consolidation loan takes it one step further; rather than just consolidating your own loans, spousal loan refinancing allows you to combine your student debt with your spouse’s loans so you have just one big loan rather than several smaller ones.

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Advantages of student loan consolidation with your spouse

Spousal loan refinancing can sound appealing, and with good reason. Combining your loans with your partner’s can make a lot of sense, and offers some unique advantages.

1. You’ll get one easy payment

If you and your partner have multiple student loans, you have to keep track of multiple due dates and monthly minimum payments. Juggling so many different accounts, it’s easy to make a mistake and miss a payment, which can hurt your credit and even cause you to rack up late fees.

With spousal loan refinancing, you combine your loans into one, so you’ll have just one monthly payment and one due date to remember.

2. You could save money

When you refinance your loans together, the lender will look at your joint income and credit report (including your credit history and credit score) when determining the new loan terms. Depending on your income and creditworthiness, you could get a lower interest rate, helping you save money over the length of your loan.

If you qualify for a lower rate, the savings could be significant. Find out how much you can save by using our student loan refinancing calculator.

3. You could get a lower monthly bill

When you take out the spousal refinancing loan, you can pick what repayment term works best for you. If money is tight, you can opt for a longer repayment term to get a lower monthly payment.

With this approach, you’ll pay more in interest over the length of the loan, but you can get more wiggle room in your budget.

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Other things to consider before consolidating your loans

While consolidating your loans with that of your spouse can make sense, there are some potential drawbacks you should keep in mind.

1. You’ll lose out on federal benefits and protections

When you consolidate your loans together, you work with a private lender. If you have federal student loans (from the Department of Education) as well as private student loans, keep in mind you’ll be making all of them private loans. Which means you’ll give up some federal benefits and protections when you refinance, including:

  • Access to income-driven repayment options: Depending on your income and loan balance, you may be eligible for an income-driven repayment plan. With an IDR plan, your loan payments are set at a percentage of your discretionary income. However, when you refinance, you lose access to IDR plans altogether.
  • Eligibility for loan forgiveness: When you refinance your loans, you’ll lose the ability to apply for the Public Service Loan Forgiveness program and other IDR loan programs (like an income-based repayment program).
  • Ability to discharge loans: With federal loans, there are some cases where some or all of your loans could be discharged. For example, if you or your spouse become disabled, you could qualify for Total and Permanent Disability Discharge. After you refinance, you’re no longer eligible for loan discharge, so you could end up having to repay your loans even in tough situations.

2. You could be stuck paying your spouse’s debt after a divorce

Unfortunately, many marriages end up in divorce. While no one wants to think that will happen to them, it could happen. And, it can have a significant impact on your finances.

Any debt that you take on before you get married is your debt — and your debt only. After the wedding, your spouse isn’t responsible for the student loans you took on while in college. If you divorce, the debt remains in your name, and your former spouse isn’t responsible for repaying it.

That all changes if you consolidate your student loan debt with your spouse’s loans. Because both of your names are on the new loan, you’re both equally responsible for the debt, even if you get a divorce. If your former partner doesn’t keep up with the loan payments, you’ll be responsible for making them, instead, which can place a huge strain on your budget.

Obviously, not all marriages end in divorce, but it’s important to keep these drawbacks in mind so that you can make a fully informed decision concerning your loans.

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Managing your money as a couple

When it comes to life after marriage, figuring out how to manage your money can be one of the toughest challenges you’ll face. If juggling multiple student loans is overwhelming, spousal loan refinancing can be a smart solution to help you streamline your student loan debt.

While not many lenders offer spousal loan refinancing, there are some that do. If you’re interested in combining your loans together, PenFed is one major loan servicer that allows you to do so.

By doing your homework and understanding the pros and cons of consolidating your loans together, you can make the right choice for you and your family.

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