How should you manage your debt if you’re married with student loans? About 45 million Americans have student loans totaling a jaw-dropping $1.6 trillion. With student debt on the increase, more and more people are bringing that debt into their married lives. Couples who are married with student debt often face a lot of challenging emotions which can put a strain on their relationship. However, many of us have been overly focused on debt instead of looking at our finances holistically. If you’re married with student loans, learn how to shift the way you look at debt, use greater empathy when discussing student debt, and create a holistic financial plan to set you both up for success. A couple’s finance app can be a big help too.
Rethinking How We Look at Debt
“Debt isn’t bad, higher interest rates are bad,” says Ashley Russo a financial advisor with Northwestern Mutual. “There’s no reason to be afraid of debt.” Russo is on a mission to empower, educate, and elevate hardworking people with their finances so that they can achieve financial security and peace of mind. As well as helping individuals, she also has solid experience with couples finance.
“What I see across the board is people have emotions to debt,” Russo says. “The most financially successful people on the planet have debt and leverage it to do greater things with their money.”
Being married with student loans can trigger feelings of shame and guilt for the spouse with student debt. Russo urges people to let go of those negative (and unproductive) emotions and take a different perspective. She says, “If you have student loans, think of it as a car payment. It’s something that got you to where you’re going.”
Couples therapist, Fiachra “Figs” O’Sullivan says, “If you’re struggling with student loans and your relationship, you can almost guarantee your spouse is too.” Helping many people wrestling with couples’ finance issues, he says challenges like student debt often get wrapped in the couple’s emotional bond and become symbolic for any problems in their relationship. He urges people who are married with student loans to connect with each other emotionally first and then find a solution for the actual financial problem.
O’Sullivan recommends “getting curious” about your emotions around your student debt or your spouse’s. Next, have a conversation with your partner, sharing how you each feel about being married with student debt. Really listen to what the other person says and offer empathy. This empathetic experience can help you feel more bonded to each other. Then — and only then — can you move forward with a solution as a team.
“Without a shared empathic experience about how painful this student debt is for both [people],” O’Sullivan says, “any solution you implement is not going to work in terms of making sure people feel close and connected to each other.”
Can Being Married With Student Debt Affect Your Payments?
Getting down to brass tacks, yes, getting married can affect your student loan payments. If you or your spouse are on an income-driven repayment plan and jointly file your taxes, that can increase your income along with your student debt payments. With some programs, even if you file separately, if you’re married with student loans, your monthly payments will still go up because your income will register as joint income. Of course, that’s not necessarily a bad thing as long as you can afford the monthly payments and you and your partner are looking at your finances holistically.
Holistic Couples Finance
True financial health should never exist in a silo. Honeydue, the couple’s finance app is a great tool for managing your money together. And if you’re married with student debt, Russo recommends sitting down as a couple and coming up with a holistic, financial game plan which includes paying down debt, refinancing your student loans, saving for a short-term emergency fund, and compounding for the future.
“Just focusing on paying off debt is such an old way of thinking,” Russo warns. “It was different when we had pensions and social security. Technically, just living debt-free was a really great strategy. It’s just not the case now.”
Not All Debt is Equal
Because people who are married with student loans often have strong emotions around their student debt, they sometimes needlessly make overpayments on these low-interest-rate loans rather than their credit card debt which is typically at a much higher interest rate. Financially, this doesn’t make sense and ends up costing people more money.
“If you’re overpaying your student loans at a higher interest rate and are sacrificing your short-term emergency fund or long-term savings, then you’re making a mistake,” Russo says. “And you’re letting emotions rather than math guide you.”
Should You Refinance Your Student Loans?
You might be paying higher interest on your student debt than you need to. Since people’s financial situations often change when they get married and interest rates are currently low, this is a doubly good time to look into refinancing. This means giving yourself a longer period of time to pay back your student loans at a lower interest rate. You can then put more resources into other aspects of your holistic, couple’s finance plan.
How to Refinance Your Student Debt
First, look at your student loan statements and see what your current interest rates are. “If you’re past 6% on a student loan, you probably want to look into refinancing,” Russo says. “See if you can get them down to 5% or 4%. Certainly, if you’re in double digits you’re doing something really wrong.” The idea is to pay down the principle rather than treading water, just paying off the interest.
Next, work with a student loan refinancing company, your CPA, or financial advisor. “You can usually get a lower interest rate as long as your credit is decent,” Russo says.
If you’re married with student loans, refinancing is a great way for you and your partner to relieve your debt instead of making student loan companies rich.
Should You Consolidate Your Student Loans?
Some people might be tempted to group all their student debt together into one new loan. However, if your student loans have different interest rates, it’s better to keep them separate. While continuing to make at least the minimum monthly payment on all your loans, tackle any with higher interest rates first.
Build an Emergency Fund
What if you or your spouse lost your job? If one of you got into an accident how would you pay the medical bills? It’s important for everyone to have an emergency fund, just in case. Russo recommends saving at least three months of living expenses. People who are married with student debt can sometimes be so focused on paying off their student loans, that they forget to put away money for an emergency.
Without an emergency fund, if you or your partner have an unexpected medical bill, you might need to charge it to your credit card which could have a 20% interest rate. Definitely not a good couple’s finance strategy.
Compounding For The Future
While many of us think about saving for the future, Russo talks about “compounding” for the future. Compounding, also known as compound interest, means generating earnings which you reinvest to generate earnings of their own. Think of it as interest on interest.
“The only way we have money for the ‘future us,’ is if we save now,” Russo says. “If you’re in your 30s, you’ve got 20 or 30 years to save, to live off of for 20 or 30 years. If you’re not compounding for the future, you might pay off student loans and have nothing for [retirement]. The most powerful tool we have in finance is time. Saving efficiently, plus time, equals success.”
Work Together as a Team
Married couples with student loans often fail to work together as a team. All too often, “One partner will be paying student loans heavily,” Russo says, “and the other is paying off a credit card debt and barely making the minimum repayment. They’re better off teaming up and paying off the credit card debt together while making minimum payments on student loans.”
Russo cautions married couples with student debt to, “Never default or miss a payment.” However, she adds, “As long as you’re making the minimum payment, you won’t hurt your credit.”
Create a Couple’s Finance Plan
Look at your finances as a whole. Understand your budget, be clear on what you’re bringing in financially, and what your expenses are. Then come up with your couple’s finance plan. A couple’s therapist can help married couples with student loans unpack their emotions around student debt in a safe space and develop new relationship tools for better communication and deeper empathy.
O’Sullivan created The Empathi Discovery Quiz, a free web app to help you and your partner learn your attachment style so you can reconnect with each other emotionally and be better equipped to work through student loans.
Meanwhile, a financial advisor can help married couples with student debt use data to move past feelings of embarrassment or guilt around student debt and come up with a holistic financial strategy.
Lastly, manage your money together with Honeydue, the couples finance app.