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Student Loans Student Loan Repayment

Should Married Couples Consolidate Student Loans?

Updated Apr 05, 2023   |   10-min read

To build a strong marriage, you need a united front on important issues. That doesn’t mean you have to agree on everything, but you should be able to tackle every challenge as a team, especially when it comes to your finances.

That’s why many couples look into consolidating their student loans, and while it makes sense to combine your student loans into one easy payment, actually doing it can get a little complicated. Let’s consider the options available for couples looking to consolidate their loans and what they should consider before deciding.

In this article:

What is spousal student loan consolidation?

Spousal student loan consolidation is when a married couple combines multiple individual student loans into one joint student loan. When you complete a spousal loan consolidation, both parties will be listed as primary borrowers on the loan.

Up until 2006, borrowers with federal student loans had the option to consolidate their loans into a special joint or spousal consolidation loan. The federal government no longer offers this program, so the only option for those interested in spousal loan consolidation is to refinance with a private lender. This means that consolidating will convert those federal loans into private loans, which removes all federal benefits and protections.

Borrowers with federal loans can consolidate their federal loans into an individual Direct Consolidation Loan. Doing so may provide more access to repayment and loan forgiveness programs, but the loans will remain separate.

When consolidating student loans with your spouse makes sense

Consolidating student loans with a spouse to save on total interest or pay off your debt faster may be a smart decision. Read below to see when it makes the most sense.

You can lower your interest rate

Refinancing to a lower interest rate can result in paying less interest over the life of the loan.

Here’s how it works. Let’s say you owe $50,000 with an 8% interest rate and a 10-year term, and your spouse owes $60,000 with a 9% interest rate and a 10-year term. If you consolidate and refinance those loans into one loan with a 5% interest rate and a 10-year term, you’ll pay $24,033 less in total interest over the life of the loan. Your monthly payment will also be $200.28 less.

While individuals can refinance student loans separately, refinancing together can occasionally lead to greater savings. For example, if one partner has an excellent credit score and the other has a low credit score, consolidating may help the latter qualify for a better interest rate.

If one spouse is a stay-at-home parent with no earned income, their only chance of qualifying for student loan refinancing may be to add the other person as a cosigner or to consolidate loans.

You need to lower your monthly payment

Many borrowers consolidate their loans to lower their monthly payments, which can be done if you qualify for a lower interest rate and keep the same repayment term that you currently have. But if you want to drastically decrease your monthly payments, you’ll need to choose a longer repayment term.

Choosing a longer repayment term to lower your monthly payment can make it easier to achieve other goals like buying a house, investing for retirement, or starting a family.

The downside of picking a longer repayment term is that you may end up paying more interest over the life of the loan. However, if you’re at risk of missing payments, are unable to pay for necessities, or can’t afford to save for retirement, then it may be worth switching to a longer-term loan.

You want to simplify repayment

The most noticeable benefit of refinancing and consolidating student loans with a spouse is decreasing the number of loans you have. When you have multiple loans to keep track of, it can be easy to forget about one and miss a payment.

Let’s say you have two separate student loans, and your spouse has three separate student loans. Instead of managing five different monthly payments, you could focus on one loan and one payment with consolidation.

When consolidating student loans with your spouse doesn’t make sense

When you consolidate loans with a spouse, you can end up with some unintended consequences. Read below to see when you should keep your loans separate.

You’ll lose federal protections that you need

Federal student loans come with a variety of benefits that borrowers will lose when they refinance. Here’s what they could miss out on:

Income-driven repayment

Borrowers with federal loans who are looking to lower their monthly payments can switch to income-driven repayment (IDR) plans. IDR plans use your income, family size, and place of residence to calculate your monthly payment.

After 20 or 25 years on an IDR plan, depending on the type of loan and repayment plan you choose, the remaining loan balance will be forgiven. Switching to an IDR plan may be a better option than refinancing and consolidating your student loans with a spouse.

Loan forgiveness programs

Only federal loans qualify for loan forgiveness programs, like Public Service Loan Forgiveness (PSLF). Under PSLF, you have to work 10 years at a qualifying nonprofit or government organization before the remaining loan balance is forgiven.

You have to be on an IDR plan while working toward PSLF, which will result in a lower monthly payment. You could end up paying less in total interest with PSLF than if you refinanced your student loans, but you’ll no longer qualify for PSLF if you refinance and consolidate student loans with a spouse.

Long deferment and forbearance options

Federal loans have much longer deferment and forbearance options than private lenders. Most private lenders only allow forbearance periods up to one year in total, while federal loans have a three-year limit for forbearance programs.

Also, borrowers with subsidized federal loans may even have interest paused during the forbearance period. If you lose your job, have a medical emergency, or are a victim of a natural disaster, a longer forbearance period could help you stay current on your loans while giving your budget some breathing room.

One spouse has a much larger loan

When student loans are taken out separately, they are only legally attached to the primary borrower (and cosigner if one is added). But once you refinance loans together, they become the property of both borrowers.

If one spouse has a much larger loan balance than the other or if one spouse is close to paying off their loans, it may be a wise decision to keep the loans separate. This prevents the spouse who has much less debt from being legally tied to that larger outstanding balance.

You want to avoid a messy situation if you get divorced

If you get divorced, the joint consolidation loan will remain in both borrowers’ names unless you each refinance the loan into separate loans. If you don’t qualify for refinancing separately, then the joint consolidation loan will stay on both borrowers’ credit reports until the loan is paid off.

Even if the divorce agreement dictates that one party is responsible for payments, the loan will still list both parties as primary borrowers. If one person is in charge of making payments and makes late payments or defaults on the loan, it will impact the other person’s credit score.

You can’t get a lower interest rate

In most cases, refinancing only makes sense if you can get a lower interest rate and pay less interest over the life of the loan. This is especially true if you have federal loans because you give up many protections by refinancing.

If you’ve tried to refinance your loans together and can’t get approved for a better interest rate, see if anything changes when you refinance separately. If you still don’t qualify, ask the lender why they declined your application.

You may need to work on increasing your credit score. Look up your credit score for free with and see what’s holding you back. Do you have late payments? Is there an old bankruptcy or default on your credit report? In some cases, all it takes is waiting for a negative event to fall off your report.

You want the loan forgiven at death

Federal student loans are discharged upon the death of the borrower. That isn’t necessarily the case for private loans. When evaluating lenders, see if this is a benefit that’s included.

If you consolidate your student loans and one spouse passes away, there’s a good chance that the surviving spouse will be responsible for all of the remaining debt. This is avoidable under the Federal Direct Loan Program.

Is consolidating student loans with a spouse worth it?

Before deciding to consolidate loans with your spouse, you should understand the pros and cons. If you have federal loans, make sure you won’t be giving up any protections that could come in handy later.

If you have private loans, see if you can get a similar or better rate without your spouse. You may be surprised at what you qualify for on your own.

Remember, if you have both private and federal loans, you’re not required to refinance both at the same time. You can always refinance private loans while keeping federal loans as they are. This allows the best of both worlds—access to low interest rates and continued federal protections.

It’s usually best to avoid consolidating with a spouse, but you can still use both sources of income to pay off student loans as a married unit. You never know what will happen in your relationship, and maintaining separate student loans is a safer option for both parties.

Questions to ask if you’re considering consolidating

Before you decide to refinance and consolidate loans with a spouse, answer the following questions:

  • Do we need the benefits and protections that come with federal loans?
  • Could we refinance loans separately and still save money?
  • How much can we afford to pay toward our loans each month? How does this compare to our current monthly payments?
  • Do we want to pay off our loans faster, at the same pace or slower?
  • If we paid less each month, what would we put the money toward?
  • Would our credit score and incomes be enough to qualify for consolidation?

Answering these questions can help you better understand why you want to consolidate, helping you choose the option that makes the most sense for you.