Is Student Debt Stressing Your Relationship? Here’s What You Can Do

When you get married or commit to a long-term partnership, any student debt you accumulated on your own is still your responsibility. However, once you merge finances, debt impacts your shared future. As such, couples may struggle to balance repaying their student loans with their plans to travel, buy a home, and start a family. Having an open discussion about student debt can help couples understand their shared financial situation and build a plan that supports their goals.

Get Financially Transparent With Each Other

Talking about your finances is an important step in building a long-lasting relationship. Ideally, you’ll start having these conversations prior to getting married. But it is never too late to start talking about:

• Debt: How much student debt does each partner have? Is that debt federal or private? What are the interest rates? What does the repayment timeline look like? Does either partner have any other type of debt, such as credit card debt?
• Credit scores: Who has a higher credit score? This will be important when it comes time to apply for an auto loan or a mortgage.
• Income: How much does each partner earn? Will all income be considered joint income, or will you decide to keep separate accounts?
• Spending habits: What does spending look like for you and your partner? How do you approach household and discretionary spending?
• Goals: Talk about goals like homeownership, starting a family, traveling, paying off debt, and having financial flexibility. What are both partners’ financial priorities? Do you need to find a compromise?

Pros and Cons of Aggressively Paying Off Student Loans First

Pros Explained

• Less interest paid: The faster you pay off student debt, the less interest that can accrue. The loan will ultimately cost less in the long term.
• Lower DTI: Lenders typically like to see a DTI of 36% or lower. When you reduce the amount of debt you owe, you lower your debt-to-income (DTI) ratio. This can make it easier to qualify for a mortgage.
• Peace of mind: Debt can be a big source of financial pressure and stress. Paying it off as quickly as possible can put your minds at ease sooner.

Cons Explained

• Less cash for short-term goals: When you prioritize debt repayment, you’ll have less cash available for other things. This may mean cutting back on travel or other expenses until your student loans are repaid.
• Potentially longer timeline for milestones: Depending on how much student debt you and your spouse have, focusing on repayment could mean delaying buying a house or starting a family.
• Potential loss of investment opportunities: With more cash going toward debt repayment, couples will have less to put toward investments, such as employer-sponsored 401(k) plans.

Pros and Cons of Saving While Paying the Minimum

Pros Explained

• More savings: With less money going toward debt repayment, couples can prioritize building their savings for other goals, such as putting a down payment on a home.
• More opportunity to invest: Leftover money in a couples’ budget can be put toward investments, including retirement accounts.
• More available cash: Couples may find this approach frees up cash for experiences, like travel, that they don’t want to delay.

Cons Explained

• Interest continues to grow: Making minimum payments ensures couples won’t default on their loans, but interest will have more time to accrue over the life of the loan.
• Longer timeline for debt repayment: Slower repayment means that couples will be living with debt and its impact on their finances for a longer period of time.

Factors to Guide Your Decision

• Repayment plan: When you get married, your monthly student loan payment amount could change under an income-driven repayment (IDR) plan. If you have an IDR plan, consider how a different payment amount could alter your projected timeline for repayment.
• Interest rates: Student loans with low interest rates may lead some couples to decide that their available cash would be better put to use building an emergency fund or invested for retirement.
• Potential loan forgiveness: Some federal student loans may be eligible for debt forgiveness. If you or your partner is eligible for Public Service Loan Forgiveness (PSLF), for example, that will help you decide how to handle that debt.
• Homeownership goals: How soon do you and your partner want to buy a home? Would your current debt load negatively impact your ability to qualify for a mortgage?
• Emergency funds: Do you and your partner have an emergency fund in place? Do you have a plan for any big, unexpected expenses?

A Practical Path Forward—Blending Goals With a Plan

Together, couples can choose how to approach their student debt. How does repayment fit into their monthly budget? How can they balance debt repayment with their lifestyle savings goals?

Agreeing on a plan is a good idea, but allow for some flexibility. Regularly check in with one another to talk about the outstanding debt and progress you’re making toward your shared goals. Do you need to make any adjustments? Could a big tax refund, a gift, or an inheritance change your approach to repayment, savings, or other financial goals?

The Bottom Line

Many couples live with student debt, but there’s no one correct way to handle repayment. Couples get to set their goals and develop a financial plan to achieve them together. What matters most is transparency and having a shared strategy that’ll help you build the life you want to live.