Borrowed Till You're Blue? Student Debt and Marriage

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By Ephrat Livni, Esq. on September 21, 2015 12:58 PM

An investment in knowledge pays the best interest, according to Benjamin Franklin. But many students in the US must borrow so much for education that they will be paying interest on knowledge long after school is over, sometimes decades later.

If you are one of those people -- or considering marriage to someone with student debt -- here is what you need to know about how you and your partner's education loans will impact you financially. While you will not be responsible for a spouse's student loans per se, the amount of debt you and your true love carry, and how you handle it, will certainly influence your economic lives together.

1. Borrowed Before Marriage

You are not responsible for repayment of your spouse's student loans taken out before you met and married. But the amount of education debt each of you has and how it is being paid off will seriously impact mates, dictating how much disposable income is available in your household and ability to borrow in the future.

Chances are good that you will borrow money again, together this time. Your partner's payment history and amount of debt will impact credit scores. Your credit score indicates your reliability as a borrower and neglecting student loans will mar credit, making it difficult to obtain a mortgage.

In other words, although you are not marrying your partner's education debts, their ability to manage these will indicate their financial responsibility and signals what is coming down the line.

2. Borrowed After Marriage

In community property states, you are liable for any debts you or your spouse accrue during marriage. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New mexico, Texas, Washington, and Wisconsin. 

In other states, known as common law states, you won't necessarily be liable for your spouse's student debts accrued during marriage. However, you definitely will be liable if you  co-signed to secure funds or get a better rate.

Even if you are not liable for each other's student debts, managing money together is important as other aspects of your financial lives are intertwined.

3. Filing Taxes Together

One way you can be responsible for your partner's student debts is if they go unpaid. Many education loans originate with the federal government, and failure to make payments can result in tax return garnishments. If your partner is defaulting on student debt and you file taxes together, you may pay the penalty on your joint return when the IRS takes it to pay spousal student debts. A spouse who is not responsible for the student loans and is nonetheless punished in this manner may file an "Injured Spouse" form with the IRS.

4. Divorce

Depending on the state where you live, student loans may not be marital liabilities and may not be divided in a divorce. If you live in a state that follows common law, you may be able to leave your marriage as you came to it: owing your own student loans.

Divorcing spouses in the nine community property states -- who borrowed money for school during the marriage -- will face a more complicated process when determining who is responsible for what. The ultimate determination of whether you are responsible for your partner's student loans will depend on what aspect of education the money was borrowed for, what degree was earned, who benefited from the education, and the new earning potential of both spouses.

5. Talk It Out

Before you get married, sit down with your future spouse and figure out your debts and how much you plan to pay as individuals and as a couple. This conversation is a good litmus test for the future.

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