The New Newlywed Game: How to Handle Student Loans and Marriage

You're a newlywed -- congratulations! Welcome to the blissful, stress-free start of marriage, where you and your partner are so in sync, you're almost one person. Or are you?
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2015-11-10-1447172282-1326383-2772736657_0ecec9ef1f_b.jpgImage source: Alesk

You're a newlywed -- congratulations! Welcome to the blissful, stress-free start of marriage, where you and your partner are so in sync, you're almost one person. Or are you?

You may think you know your spouse inside and out -- but do you know about their student debt? A shocking 44 percent of Americans say personal finances are the toughest thing to talk about -- more difficult than religion, politics and death -- according to a recent Wells Fargo survey. Couples who argue over finances multiple times a week were over 30 percent more likely to divorce than those who argued less than once a month.

As newlyweds, financial transparency including with your student loans is vital. And even more important is finding a way to discuss this tense topic without arguing.

Whether it's a change in repayment plans or taking on the responsibility of your spouse's student debt, married couples need to be ready to make adjustments that ensure financial well-being for their new family. The following three steps can help you avoid fighting over your finances:

1. Review income-driven repayment plans

Many people take advantage of income-driven repayment plans when paying off their student debt. These plans typically lower monthly payments to 10-15 percent of your monthly discretionary income.

Your expected payment can change when you're married because more likely that not, you'll file your taxes jointly. This can cause your reported household income to increase, which can then cause student loan payments to increase if you're enrolled in an income-driven repayment plan.

While you may be thinking you want to avoid this, filing your taxes jointly can also come with higher tax deductions. So it may still be worthwhile to file together.

To determine what to do, all newlyweds should remember to sit down with a financial advisor or tax advisor early on to determine if you should file jointly or separately based on your entire financial picture.

2. Be prepared for the future

The future can bring many financial unknowns, like: Will you be able to afford a mortgage? Can you save for your children to go to college? How will you pay for repairs if the car breaks down?

But there's an even more important question to ask -- who will be responsible for your student debt when I die? It's a conversation not many want to have, but it's as essential as preparing a will.

Federal student loans have a death discharge to ensure that the lender's spouse isn't saddled with their student debt.

However, private student loans may or may not have a death discharge. For loans that don't, term life insurance can often be a smart choice to ensure co-signed private student loans will be paid in the event of death.

Also, if you live in one of nine community property states, your spouse can be held liable for your student loans, even if your spouse isn't a co-signer.

Ultimately, it's important to know what will happen to your student loan debt and how it will be paid so there aren't any surprises.

3. Make honesty your only policy

Nothing can damage a relationship in its infancy like dishonesty -- especially when it comes to finances. However, 43 percent of people do not know their spouse's income.

Being upfront with your spouse about your income, debt, and financial goals can make a huge difference from the start of a marriage. It will help ensure you have enough information to build a plan to manage your finances together and prevent you from digging a deeper hole of debt.

Financial conversations might seem like the most difficult ones to have with your new husband or wife -- and may even cause more drama than skipping out on chores. But ultimately, having frequent, open and honest discussions about money and debt is important.

With the millennial generation already on their way down the aisle, and having the highest amount of outstanding student loan debt ever recorded, incorporating this important topic into the conversation is key to ensure a healthy and financially secure relationship.

For easy-to-use tools for managing and paying off your student loans, check out Student Loan Hero.

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