When you share finances with your partner, it might seem like a no-brainer to merge your student debt. And if one of you has a higher income or credit score, it can often help you save on the monthly and total cost of your loans. But you’ll lose several benefits if you have federal loans since your only consolidation option is with a private lender.
How to consolidate your loans with your spouse
There are two main ways to combine your student debt with your spouse’s: consolidating your loans together or refinancing separately with the other as a cosigner. Both options involve private lenders, so you might want to think carefully about the federal benefits you might lose by refinancing.
Purefy offers a special deal for married couples through PenFed Credit Union. The Spouse Loan is the only refinancing offer that allows you to both move all of your debt into one loan with the same rate and term.
Who’s it best for?
It’s designed primarily for stay-at-home parents, though any married couple can apply.
Can I qualify?
Your application is based on the following factors:
Combined income. You both don’t need a salary to qualify.
Individual credit scores. One partner must have a credit score of at least 670 and the other must have a score of at least 700.
Highest degree. One of you must have a bachelor’s degree to qualify — though the higher your education level, the better.
Loan amount. You must have a combined loan balance between $7,500 and $300,000.
What’s the downside?
The main downside to this option is that few providers offer it — you might be out of luck if you don’t qualify with Purefy.
A more common way to share your debt load is to refinance both of your loans with the other as a cosigner. You’ll both be equally responsible for paying off the debt, and you could even get a better rate if one of you has higher credit score or income.
Who’s it best for?
This option is best when both partners have strong credit and are employed. Otherwise, you might have trouble meeting the requirements to qualify.
Can I qualify?
Refinancing companies tend to have the following requirements for borrowers:
600+ borrower credit score
700+ cosigner credit score
$5,000+ student debt load
Meet minimum income requirements for cosigner and borrower
Some companies also require you to be a graduate to qualify.
What’s the downside?
It’s not right for all couples. If you’re both recovering from a hit to your credit score or don’t have a high income, it might not get you a better deal.
If the idea is to share the responsibility of your student loans with your spouse, there’s a chance you already do. In states that follow community property laws, you’re responsible for any debt your spouse took out after marriage, including student loans.
Community property states include:
Guam and Puerto Rico are also considered community property jurisdictions. How community property laws work in your state can differ. But generally, you don’t need to refinance to share the responsibility if one of you took out student loans after marriage.
When is consolidating the right move?
Consolidating your loans with your spouse’s might make sense in the following situations:
One of you is a stay-at-home parent. Consolidating with Purefy allows you to take advantage of the lower rates and more favorable terms of refinancing you otherwise couldn’t qualify for.
You both work, but one earns a lot more than the other. Lenders often consider the highest salary between a cosigner and borrower if you choose to consolidate or refinance together.
You both have good credit, but one has a higher credit score. Lenders tend to consider the highest credit score between the cosigner and borrower when you apply for refinancing — as long as you both meet the minimum requirements.
One of you has a graduate or professional degree. Some refinancing companies offer lower rates based on your level of education — especially if it’s a degree in a high-paying field like law or medicine.
When should I consider other options?
The main reason you might want to rethink refinancing? You’ll lose the benefits that come with federal loans, like flexible repayment plans and forgiveness options.
Here’s when sticking with your current loans or refinancing on your own makes more sense:
You’re considering forgiveness. Federal loans are eligible for more forgiveness options than private loans, such as the popular Public Service Loan Forgiveness (PSLF) Program.
You can benefit from income-driven or graduated repayments. Most refinancing partners are less flexible with repayment plans and only offer one option with the same fixed repayments each month.
Both of you work in low-paying fields. If neither of you meet the minimum income requirement — or just scrape by — you likely won’t qualify for a better deal, if at all.
One of you is thinking of a career change. You might be able to benefit from deferment or forbearance if you have federal loans and decide to go back to school or switch jobs.
Neither of you have strong credit. Your chances of qualifying for either option are pretty thin if one of you doesn’t have good to excellent credit.
You’re not comfortable sharing finances. Signing on to your partner’s debt as a cosigner means you’re responsible for repayments until the loan is paid down — even if you get divorced.
The most common way to share the responsibility of your debt is to refinance with your spouse as a cosigner. But that’s not always the right option. If you both can’t meet the credit and income requirements, you won’t qualify. And you’ll lose out on the benefits that come with federal loans.
You can — but only with a private refinancing provider. The federal government doesn’t allow married couples to consolidate their federal student loans together.
You can take out a personal loan to consolidate student debt — but it might not be the best idea. Personal loans tend to have higher rates, shorter terms and maximums that might not fit your entire debt load, especially if you’re sharing it with your spouse.
Yes, you can take out a parent student loan from a private lender by bringing on your partner as a cosigner. You can also bring on your spouse as an endorser on a federal loan to share the responsibility. But generally this isn’t an option until you can meet credit requirements on your own.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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