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Refinancing/marriage effect on student loans

Discussion in 'Psychology [Psy.D. / Ph.D.]' started by foreverbull, Sep 13, 2017.

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  1. foreverbull

    foreverbull 2+ Year Member

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    Situation: in forbearance due to lack of steady income, just got married, and needing to start paying on loans (relatively high amount, spouse has no debt and makes decent income, but a large loan payment would definitely be a big challenge). Need to start paying but will not personally have a steady income for awhile while building practice.

    Has anyone else experienced a similar situation (i.e. marriage while repaying or starting to repay and/or refinancing) and what did you opt to do?

    I'm leaning toward refinancing and joint filing but am a little concerned about keeping the monthly payment down to a reasonable number.
     
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  3. Jon Snow

    Jon Snow Senior Member 10+ Year Member

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    - refinance if lower rate, better terms.

    - don't allow your spouse to put themselves on the loan (unfair to them).

    - pay at least the interest on the loans, otherwise you are building principal and that's bad for you.
     
    MamaPhD and Justanothergrad like this.
  4. Pragma

    Pragma Neuropsychologist 5+ Year Member

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    Kind of depends on the type of loan and if you are aiming towards any of the forgiveness options. Some of the income-based plans let you file separately and not count your spouse's income, which will keep your payment low. However, if you don't have a forgiveness option then I'd pay as much of it down as fast as possible (at least interest as JS stated).
     
  5. MamaPhD

    MamaPhD Psychologist, Academic Medical Center 7+ Year Member

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    Congrats on your marriage. Hopefully by now you and your spouse have reached a mutual understanding about how you will handle money matters in general. My husband and I came into our marriage both with modest student debts, which we kept in our respective names. Our philosophy was (and still is) to combine incomes, keep prior debts legally separate but in practice treat each other's as our own, strive to get the best terms possible, and make any future major financial decisions together.
     
  6. Jon Snow

    Jon Snow Senior Member 10+ Year Member

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    Yes, exactly.

    I don't combine incomes. We manage our money independently, but we discuss it. I helped pay her student loan, such that it was. But, keeping the debts legally separate is logical in that student loans are 1) Not marital property and 2) Not dischargeable in bankruptcy. Basically, student loans are even more forever than marriage :)
     
  7. foreverbull

    foreverbull 2+ Year Member

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    Thanks! We definitely discussed things prior to marriage, and we have an agreement about mutual financial support as part of being partners (I would have done the same for my spouse). I worked full-time last year in my postdoc and supported us both financially until my partner could find a job, and my spouse is now working full-time while I build up the practice, so in response to @Jon Snow, there's no real ability to keep debt fully separate if only my spouse is pulling in real income but forbearance is ending..I'm fine with keeping the debt in my name, but perhaps you could speak to the effect of placing it in both names?

    The main issue is that we are trying to be fiscally smart about how to tackle the debt in a way that allows for lower payments in the present that we can adjust upward in the future when in a better financial position and lower overall payoff amount (balancing flexibility in payments with as low of a payoff amount as possible).

    As a general update, I thought refinancing might be a good option, but I didn't realize that graduated payments weren't an option, so I'm better off with my current federal loans and pay off extra principal as I'm able with the REPAYE plan and then refinance for a better interest rate once the fixed monthly payment is doable (and making sure the lender allows for overpaying on the principal without punishment).
     
    Last edited: Sep 14, 2017
  8. Jon Snow

    Jon Snow Senior Member 10+ Year Member

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    I didn't mean that your debt won't affect your spouse or that he should not help pay it off, only that, if it is reconsolidated into shared debt, it is still student loan debt, and, if you get divorced, you die, or whatever, your spouse will be responsible for paying it off. By keeping it in your name, you protect your spouse from those outcomes.
     
    Last edited: Sep 14, 2017
  9. foreverbull

    foreverbull 2+ Year Member

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    For sure! My spouse has no student loan debt, so that isn't an issue for me personally, but that's a good point for those who are considering reconsolidating their own loans to a joint loan....you are putting your partner on the hook for your debt if something happens to you. Good to keep in mind!
     

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