If you are married and you and your partner have educational debt, you may want to consolidate student loans with your spouse. But, before you move forward, you need to know the rules for when you can do this and consider the pros and cons. This guide will explain when you can combine student loans with your spouse and offer insight into some key considerations about making this financial move.
Can you consolidate student loans with your spouse?
Answering the question of whether spouses can combine student loans can be complicated. It depends on your educational debt and the process you want to use to combine the loans. The Department of Education allows the consolidation of federal student loans without losing federal aid benefits such as flexible repayment schedules. Unfortunately, joint consolidation loans were eliminated by Congress in 2005. If you are interested in federal debt consolidation, you cannot consolidate student loans with your spouse.
How to combine student loans with spouse
Although you cannot combine student loans with your spouse using the Department of Education’s debt consolidation process, it is still possible to combine multiple student loans from each partner. You will just need to use a private student loan lender to do it. Private student loan lenders can refinance both federal and private loans. Many lenders allow you to combine your debts with your spouse. You can take out a large refinance loan to pay off both of your existing student loans. You may qualify for a refinance loan at a lower rate. However, remember that private student loans are different from federal student loans. If you refinance federal loans with a private lender, you lose access to many benefits, including:
- Public Service Loan Forgiveness
- Income-driven payment plans
- Generous deferment and forbearance options
- The ability to change your payment plan as needed.
Most people do not, and should not, refinance federal loans because of this. This means that the answer to the question, can spouses combine student loans, is that you technically can but should likely do this only with your existing private loans. If you have federal student loan debt, consolidating your loans with your spouse likely isn’t a good option. If you refinance student loans that are already private, you don’t lose any important benefits since you were already working with a private lender anyway.
Why you might want to combine student loans with your spouse
There are many reasons why you might potentially want to consolidate student loans with your spouse. Here are some possible reasons:
- To simplify repayment: It can be easier to repay your student loan debt if you have just one monthly payment to make instead of many. And you don’t have to decide which debt to prioritize.
- To reduce your rate: Refinancing could potentially lower the rate you are each paying on private loans. If one of you has better credit than the other, combining your loans could also help to make sure you both get the lowest possible interest rate on your refinanced debt.
- To better work towards joint financial goals: When you combine student loans with your spouse, there’s no longer separate debt. You have one joint goal you’re working towards.
You may also have other reasons of your own. The important thing is to go into the process with both eyes open and not just ask if you can consolidate student loans with your spouse, but also should you.
Pros and cons of combining your student loans with your spouse
Before you move forward with combining your student loans with your spouses, be sure to consider these pros and cons.
Advantages of combining student loans with spouse
The biggest benefits of combining student loans with your spouse include:
- Potentially reducing borrowing costs if you can qualify for a lower rate with a joint refinance loan
- Helping out a spouse with lower credit to be able to qualify for refinancing
- Simplifying the payoff process since you have one loan instead of multiple loans to pay back
- Getting on the same page with joint financial goals
- Potentially paying off debt faster due to the lower rate and your joint efforts
Disadvantages of combining student loans with spouse
And the biggest disadvantages of combining your student loans with your spouse are:
- You could lose federal borrower benefits if you refinance federal loans to combine them with your spouse
- You become jointly responsible for your partner’s debt
- Divorce could become more difficult and messier if you combine student loan
If you have considered these disadvantages and are still ready to move forward, be sure you do your research to find the right lender.
Find the Right Lender
When you look into which private loan refinancing company to work with, ask if spouses can combine student loans with that particular lender. And you may wish to compare joint and individual loan rates to see which type of refinancing plan could help you save the most money. By researching loan options and finding the right lender to work with, you can ensure your student loan consolidation process goes smoothly and is the best financial move for you.
