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Should You Be Held Responsible For Your Spouse’s Student Loan Debt?

Romantic evenings with your partner and student loans- certainly don’t go hand in hand! But that is inevitable a concern if your spouse or (probably) potential spouse visited the college or university and has been carrying a hefty student loan burden. So when it comes to debt, it might make you ponder whether the student loan debt is an equal concern for you or not? The best thing would be to try and pay off all such loans quickly.

Just in case you think you are accountable for your partner’s loan if they happen to die- think of a life insurance policy that will be enough to cover the overall outstanding loan balance. Of course, none of us like to think along these lines. But you need to keep a plan B or a backup. We never know when “financially catastrophic events” can strike! Whether you do or you don’t, here are some potent questions to ponder.

Have You Co-Signed For Your Spouse’s Student Loans?

This is straightforward. If you had co-signed your spouse’s loans at any given point of time, regardless of the type- private loan, refinanced loan, federal loan, and so on the chances are that you’re legally liable for any or all of them. Let’s not forget that you are a co-signer, which means your name is now part of the contract.

As a result, you agree to pay the student loans if your partner fails to do so within the stipulated period. If your partner is unable to pay the loans or they die, the lender will automatically depend on you. So think a couple of times before you decide to be the co-signer. However, federal loans don’t need co-signers, so you’re safe if you opt for it. On the other hand, private lenders may require co-signer/s since there’s no credit history that students usually have.

Was The Student Loan Taken Out Before Or After Your Marriage?

This is a tricky one! But you have a simple answer to it. If your spouse had taken a student loan before tying the nuptial knot, then under no circumstances you will be responsible for paying off the student loans. However, it’s not that easy.

The complications begin when your spouse decides to take out the student loan after walking down the aisle with you. Also, a lot depends on whether you’re putting up in a community property state or not. It is advisable to check the community property states that can impact the student loan paying or repaying.

How Do Student Loans Work In Community Property States?

For any debt incurred after marriage – the couple will be responsible for dealing with it in any community property state. Cases might differ when it comes to student loans. For example, if your spouse had taken federal student loans after marriage and you reside in a community property state, there are high chances that you won’t be held accountable for the same.

As stressed earlier too, the real issue comes with private student loans. This is a separate debt that stays with the person who had taken the federal student loan. It doesn’t matter whether they married after that or where they stayed. If they die or are battling a divorce, you might have to pay the debt. This is largely because the particular state’s rules and laws consider you responsible for this.

Ideally, in community property states, the couples are jointly responsible for any debt taken while they were in a marital relationship. But state laws can differ too. While some states can “let you off the hook” if the private loans were taken when you both walked down the aisle. The story is different in most cases. But for the former, it’s worth investing in hiring an attorney to understand the legal codes better.

Simply put, whether you pay or repay, student loans can affect both spouses. Even if you’re not responsible for the debt, you can always feel the pinch. It’s a tough job to maintain finances, manage the home front, look into what goes in and out of the bank accounts, and then stick to a well-chalked-out budget plan. Most importantly, evaluate the options around and consider hiring an expert planner for student loans.

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