If you and your spouse both have student loans you’ve probably considered consolidating all of your student loans together. As a couple, you’ve thrown out the terms “yours” and “mine” and instead it has all become “ours”; but does that include everything?
Sure it includes the bathroom space, the cupboards and the closet (okay, the walk in closet is just yours), but does it include finances and student loans?
Your spouse is not financially responsible for any debt you’ve incurred before the date of your marriage, including student loans, credit card bills and any other debt. Any debt you take out together as a married couple is a shared financial responsibility. This is one reason we’d recommend against consolidating your student loans with your spouse.
When you consolidate loans with a private institution that means you’re getting a whole new loan to cover the sum of all the loans you’re consolidating. Let’s say that you have $30,000 of student loan debt, and your spouse has $90,000. When you consolidate your student loans you’re taking out a new loan for $120,000. If your marriage ends in divorce, you could get snagged with half, or $60,000, of that loan and now you’ve doubled your personal student loan debt. If your spouse dies you may be on the hook for the entire bill.
Another scenario worth considering is if one of you decides to return to school. Because you are both responsible for the consolidated student loan, but only one of you is in school you’ll still be obligated to make payments rather than having the option to take advantage of in-school deferment. Similarly, if you wanted to go into deferment due to unemployment, both spouses qualify for deferment.
Another consideration is whether the institution you’re consolidation with allows you consolidate student loans with a spouse. While iHELP does not offer spousal consolidations for the reasons mentioned above, consolidating your own student loans is still a great option. You may be able to reduce your interest rate or your monthly payment or both. Get started with our easy online application.