When planning to tie the knot, it’s easy to focus on wedding costs. After all, today’s elaborate ceremonies can get pretty expensive. The cost of marriage extends far beyond one’s wedding day.
Many couples enter into marriage owing a substantial amount of debt. This is especially true for newlyweds who racked up student loans while attending college.
In 2017, according to the New York Federal Reserve, student loan debt reached $1.4 trillion dollars. This figure included more than 44 million Americans with outstanding college loans.
It’s not uncommon for individuals to borrow the funds to cover the costs of college. When couples marry, they often consolidate their debts.
Considering the debt of two versus one can be overwhelming. Debt consolidation often makes the most sense for couples who are still facing student loan payments.
Read on to find out the best way to consolidate student loans after marriage!
When Two Debts Become One
The added financial responsibilities that many newly married couples face can be a major source of tension on a marriage.
In fact, a study published in 2018 by finance guru Dave Ramsay, found that financial stress is the second leading cause for divorce in America (the only issue that creates more problems than money for married couples is infidelity). Additionally, the study found that high levels of debt and lack of communication can compound a couple’s financial marital woes even more.
When dealing with financial stress, however, there are a few things that couples can do to improve their outlook.
Money & Marriage
Few marriages survive without encountering a fair share of bumps along the way. And, most couples will find themselves under excess financial stress at some point over the years. But, how you approach life’s hiccups can determine whether or not you last as a married couple.
Communication is Key
Even before you make a decision at the altar, you should begin communicating openly and honestly with your spouse-to-be. It’s important to discuss your financial situation prior to, as well as throughout your life as husband and wife.
Upon entering a lifelong commitment, both partners should have a clear understanding of the one another’s financial obligations, credit history, and debt.
While financial planning may not be the most pleasant thing that you will do together, you shouldn’t make it more complicated than it has to be, either.
The Couple That Plans Together…
After reviewing your current financial circumstances, both husband and wife should work together to develop a financial plan.
Some areas your plan might address include:
- Paying off debt
- Saving for the future
- Creating a budget
- Bills and payment schedules
You also should discuss whether or not you will maintain individual responsibility for the debt you have accrued prior to marriage or whether you will consolidate your debt.
The Best Way to Consolidate Student Loans After Marriage
Each partner should make an effort to understand their options for approaching student loan debt.
While traditional debt consolidation involves merging two or more debts, you can’t actually merge two student loans into one. You can take out a new loan for the consolidated amounts of both parties’ student loans.
Some couples prefer consolidating their debt because it cuts down on your monthly payments when you are responsible for one versus two payments each month. Also, it may reduce the amount of interest that you will pay over time if you consolidate your loans into a new loan.
After weighing your options together, if you choose to combine your loans, you must find a lender such as Assets America. Lenders are willing to loan you the amount that you both owe collectively for your student loans. Many private lenders will be happy to help you find the best solution to fit your needs.
You might even be able to find loan terms that are better than your current student loans.
Many student loans are distributed through government-chosen agencies, rather than private banks or public lending institutions. You should be aware that debt consolidation for couples through these types of agencies is not an option.
If you decide to consolidate your student debt, you will have to use an alternative lender, should your prior loans be through a government-affiliated agency.
Shop around and speak to several banks and lenders before settling on the option that suits you best. You might find there is a wide range of interest rates and a variety of terms that are offered by lenders. And, you may learn that not all of the loans that are available will work for you.
Keep in mind that once you consolidate your student loans, you are both equally responsible for the entire amount of the loan until it is paid. If one partner owes a significantly larger amount, this could create a future resentment for the other person.
Also, any debt that you accrue prior to marriage is each person’s individual responsibility.
Once you take out a new loan, you will both be responsible for the debt until the loan is paid in full.
In the unfortunate event that you should divorce, you could be responsible for paying more (or less) than your share.
Want More Pre-Marriage Advice?
Choosing the best way to consolidate student loans before you marry can help put both partners’ minds at ease.
Then, you can begin preparing for your wedding day.
Planning your wedding will probably be a lot more fun than planning your financial future (although both are important!).
But, even planning your wedding can be a challenge, no matter how much you may be looking forward to the big event.
Check out this post for top wedding tips to help you plan your big day!