Marriage and Student Loan Debt

January 17, 2019

Ever been on a date where the other person doesn’t stop talking about their ex? If you’ve had this experience, you can likely relate it to discussing your student loan debt in your relationship. Talking about finances is a necessary evil in a marriage. It can be difficult to discuss finances in a marriage because many people handle finances different based on their personal experiences and how their parents handled them. You might be great at adulting, but if your parents were never open about managing money, you’re probably unsure of how to bring it up. You might even be unsure as to where to start when it comes to managing finances together. Student loans are a big part of many couples’ financial reality. Figuring out how marriage will affect your student loans is an important part of managing your money together. Here are some main points that we think you should know about marriage and student loan debt.

Honesty

The fastest way to create a rift and cause problems in your relationship is to hide information about your finances. According to C reditCards.com, 6% of Americans in a relationship have hidden credit cards or checking/savings accounts from their partner. That total adds up to about 7 million, for perspective, that’s the size of the state of Massachusetts. It’s not uncommon especially in younger people ages 18-29 to withhold some financial information. It’s when a partner begins to lie about large purchases that a partner should become concerned.

People might think that love solves everything, but it’s better to be on the same page and realistic about the situation. If you are mature enough to get married and really want to work together to succeed, you need to face your finances. As a couple, you need to get over any fears about assessing the financial situation and air everything out. It doesn’t have to be painful but it needs to be an honest outlook. For some couples, this can seem really overwhelming but it doesn’t have to be.

Get Tips on How to Talk Finances With Your Partner

Get a Plan

Have a conversation about how to best review everything. Discuss each of your finances and then surmise a plan to tackle them. Now in some cases, it may not be this simple depending on your income level, occupation, and level of debt. You may want to meet with a financial counselor first and go over everything together, or sit down as a couple at home and discuss the basics before moving any further. It’s totally up to you both, as a team.

Don’t be shy or embarrassed by your financial situation as a couple. There are people who make a living on making sure couples are financially confident and ready to tackle financial goals together. Don’t overlook this benefit of consulting with an outside source about finances—especially if you feel like you don’t know what you’re doing. If you can’t afford an outside counselor check online, you may be surprised at the educational resources available for free. When it comes to self-learning about finances just be careful how you select your resources. As the old saying goes not everything you see online is true!

Loan Responsibility

When the person you’ve chosen to marry has student loan debt you can face some challenges. If you haven’t co-signed for a spouse and it’s just their name on the loan, this won’t be something that shows up on your credit report. Beware that even if you did not co-sign your partner’s loan there are instances when you might be responsible for paying the loan. Student loans aren’t that different from other types of loans.

For example, if someone passes away, the rest of their loan will likely be forgiven and the spouse would not have to continue making those payments. There are some cases where death will not discharge the remaining debt and the loan company may contact the estate for payment. If your spouse ever lost their income and went into default, the loan companies will look for someone to pay. If your spouse doesn’t have an income, your wages could be garnished. It’s a pretty extreme scenario, but it also happens and is something you should be aware of.

If you are choosing to marry someone with student loan debt, it’s important to talk about this. You’ll want to have a plan set up for each of these scenarios. Though they are extreme if you have savings and you pay down your debt responsibly you shouldn’t have any problems.

Repayment Plan Adjustments

IBR and other types of repayment plans are often used when paying back student loans. We would caution against using these programs. In some cases, your monthly student loan payment may not be covering the interest accrued that month and therefore your balance will continue to increase.

Repayment plans can be based on your household income and family size. When you get married your income and family size may change. If your spouse makes a considerable amount of money, your minimum payments could go up even with your family size going up. If your spouse makes less than you or is not working, your loan payment could go down. It all depends on the details of your financial situation and your loan servicer, but it’s worth noting that this is a possibility.

Refinancing

Fairly often we receive request to refinance couple’s student debt together. Many see this as creating a lot less hassle for themselves by creating only one bill. That’s not always possible, and many experts suggest keeping your loans separate in case your relationship status or financial situation changes in the future. You are not always able to refinance together, either. Whether or not you can refinance your student loan with your spouse will depend on the loan type and servicer you have. If you’re looking into refinancing, talk to each other about goals. Do you want a lower payment so you can save for a house or do you want to pay loans off sooner so you can live abroad or go to grad school? Again, it’s up to the two of you, but you can’t be on the same page if you don’t talk about it.

Don’t stress.

Take a deep breath and know that it’s normal for people to get stressed out talking about money, but it doesn’t have to be that way. No matter how much money you make, you will have to work together as a team to set priorities. This isn’t a blame game. Just talking about finances doesn’t mean that you’re secretly harboring any resentment or grudges. No one is being attacked and no questions are stupid. You both have to agree to create an open dialogue where you both feel good about discussing money and plans. Know that sometimes there are compromises, or one of you might change your personal plans to advance the other. That’s what it means to be a team.

Tips for Finding the Perfect Lender to Refinance Your Student Loans

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How Applying for Private Student Loans Affects Your Credit Score

Whenever you apply to take out a loan, a credit inquiry from one or several credit reporting agencies will likely occur. If you have a solid credit history, the effects are usually minimal. However, the effects will typically be larger for someone with little-to-no credit. According to an article by Bev O’Shea posted on Nerdwallet, whatever impact your credit score suffers should fall off after 12 months, and after about 24 months, the inquiry should disappear from your credit report entirely. There’s also an important distinction between a “soft” and “hard” credit inquiry. A “soft pull,” as it’s known, can be done just in connection with pre-qualification for a loan, whether it’s a credit card offer you receive in the mail, mortgage, student loan, or car loan. Some employers will do a soft pull of your credit as well. Soft pulls do not impact your credit score. A “hard pull” generally requires your consent and happens when you apply for the credit you’re seeking. It’s the hard pulls that show up on your credit report. It’s important to monitor your credit report and dispute any hard inquiries you didn’t authorize. In the case of private student loans, a prequalification will not affect your credit, whereas applying for a loan will show up on your report.

Applying for Multiple Private Student Loans

So, what if you submit multiple applications? Will they all affect your credit score? It’s hard to know for sure, as credit-scoring model companies don’t provide a lot of detail about their models. Generally speaking, credit-scoring models appear to take into consideration that if an applicant has multiple inquiries for a student loan they may be shopping for the best rate. One key point is that the closer those inquires are together, the less impact it may have on your credit score. In other words, shopping around to find the best loan option for you should not affect your credit score dramatically and is likely not a major cause for concern. By applying for multiple private student loans, you can see which lender will actually give you the best rate – important when it comes to saving money over the life of your loan. ELFI offers a variety of private student loan options for financing your undergraduate or graduate education, as well as private student loan options for parents.* Check out our full list of frequently asked questions or contact ELFI at 1-844-601-3534 to speak with a Personal Loan Advisor. *Subject to credit approval. Terms and conditions apply. Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.

Female medical student standing next to professor

2019-10-17

Medical School Debt: Why Now May Be the Time for You to Refinance Student Loans

The road to becoming a doctor is a long and expensive one. After 4 to 5 years of undergraduate studies, 4 years of medical school, and 3 to 7 years of residency, many graduates are well into their 30’s before they earn a doctor’s income. Residency does come with a paycheck, but the average Resident Physician makes $58,803 a year, according to glassdoor.com. It's hard to imagine much of that is applied to medical school debt. Americans owe a total of $1.6 trillion in federal and private student loans and newly-minted doctors carry a good portion of those loans, carrying an average of $179,000 in medical school debt, six times more than the average graduate. Student loans can be a financial and emotional burden, even for doctors, and consolidating and refinancing those loans can be a relief on both fronts. With consolidation, you can roll multiple loans into one, leaving you with a single monthly payment. This simplifies repayment. Refinancing means agreeing to new and different terms of your loan with the goal of getting a better interest rate or term. Better rates and terms can make medical school debt more manageable.

Why Now is the Time to Refinance

Monthly principal and interest payments on student loans can bury many borrowers. A lower interest rate can help you save thousands of dollars over the life of your loans. Better rates also mean you can pay down that medical school debt faster, also helping you pay less in the long run. The importance of refinancing now is that you can start saving immediately. Depending on what you qualify for through private lenders like ELFI¹, you could lower your interest rate, have a single monthly payment, lock in a fixed interest rate, and more. All helping you to enjoy the fruits of your hard work faster. Another reason to refinance now is that the Federal Reserve Board lowered interest rates twice already this year. This federal interest rate applies to banks—it’s the amount of interest they charge each other to lend federal reserve funds. The benefit for you, as a borrower, is that the less interest banks pay, the less you can potentially pay.

Refinancing Federal vs Private Loans

In our blogs, we regularly discuss the difference between private student loans and government student loans. Keep in mind, the differences between these loans come back into play for refinancing. Regardless of your initial loan type, when you refinance your medical school debt, you take out a new loan with a private lender – ideally at a meaningfully lower interest rate. With this new private loan, you can lose access to federal benefits like:

Income-driven repayment plans
Ability to pause payments through deferment and forbearance programs
Loan forgiveness programs

ELFI has a team of Personal Loan Advisors who can help you decide if refinancing makes sense for your situation. As always, we encourage borrowers to look for student loan refinancing loan options with no origination fees or application fees first.

Downfalls to Refinancing Medical School Debt

Other than losing out on federal borrower benefits, refinancing your loans might not make sense right now. If you already have a low-interest loan, you might not see much savings. To see what you can save, use ELFI’s savings estimator tool. Additionally, some banks charge fees that could potentially offset any interest savings. With ELFI, you’ll never pay:

Application fees
Origination fees
Prepayment penalties

Finally, if you’re still in your residency or fellowship, it might make sense to wait until you have a higher income or better credit score, both of which will impact the interest rates available to you. Or you might considering having a cosigner to help you achieve an even lower rate.

Other Options to Payoff Medical School Debt

While refinancing can lower your monthly payments and get you a better interest rate, there are other options for lowering your medical school debt. Consider overpaying your monthly amount. This option isn’t realistic for all borrowers, but if you’re savvy enough to live simply or lucky enough to apply a spouse’s paycheck, you can quickly pay down that medical school debt. Some graduates might even have the option of taking out a zero-interest (or ultra low-interest) loan from relatives or friends. Once the student loan is repaid, you can put the excess funds toward other debts or investments.

Understanding Your Loan Refinance Options

It is important to explore all your options when opening an initial student loan. It's equally as important to explore the best refinancing options for reducing your medical school debt. If you need help navigating those options, contact ELFI. As pioneers in the space, our management team has over 30 years of expertise in student loans and student loan refinancing. ¹Subject to credit approval. Terms and conditions apply. Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.

2019-10-16

Can I Refinance My Student Loans and Go Back to School?

Many Americans, at one time or another, have thought about their student loans as they contemplate whether or not they can afford to go back to school and pursue additional higher education. Maybe you were able to partially pay your way through college, but couldn’t quite close the gap, so you turned to federal student loans or private loans to make ends meet. You may have been accepted into your first-choice school and you made the financial leap using student loans to fund the degree of your dreams. Whatever the case may be, you’re now in a situation where you need to change your current student loan structure in order to go back to school and take the next step in your education. Student loan refinancing may be the best option to help you lower your monthly payments and allow you to go back to school with financial peace of mind.

**So I Can Refinance My Student Loans and Go Back to School - But Why Should I?**

The short answer to the question “Can I refinance my student loans and go back to school?” is often a “yes”. There are lots of options for dealing with student debt, and those options change depending on the amount of your current student loan debt, whether your current student loan is federal or private, and what you’re looking to achieve through student loan refinancing. This means that no matter what your financial situation, you can almost certainly take advantage of a student loan refinance through a reputable private lenders such as ELFI¹ provided you can meet credit criteria established by each lender. One advisor stipulates that you should only take out new student loans that won’t overburden your financial situation by taking on too much debt or “overleveraging”. Overleveraging means taking on more debt than your income can comfortably pay for, as measured by financial ratios such as “debt-to-income ratio,” or DTI. If you already owe a lot on your current student loans and have the financial means to afford new student loans, then you might want to consider refinancing the student loans you already have to make room for the new monthly debt payments you will have on the additional student loans you take out. That’s good news for graduates who shelled out a pretty penny for their undergraduate degree. In general, the best reasons to refinance your student loans - if you’re taking on new debt to go back to school - would be to:

Get a lower interest rate (and potentially lower monthly payments)
To take advantage of new federal or private loan programs that may be financially suitable to you, or
To consolidate the student loans you already have with a single, private lender rather than dealing with multiple lenders on your existing student loans.

Is a Student Loan Refinancing My Best Option?

Student loan refinancing does have some benefits that other options, such as debt consolidation programs, would not (like allowing you to release a cosigner from your previous loans). One big benefit you’ll likely receive from student loan refinancing is a lower monthly payment. The federal student loan debt consolidation program, unlike student loan refinancing with private lenders, averages the interest rates of your existing federal loans and rounds up the weighted average interest rate by an eighth of a point, so while the interest rates of some of your loans may go down, others will go up to meet the average set in the consolidation process. That means that your interest costs likely won’t change all that much, if at all. There are many reasons to explore refinancing your student loans, including improving your interest rate, payment timeline, or ability to take on new loans with the money you could save each month. Other benefits include releasing a cosigner from one or more loans, getting better customer service or benefits than you currently get from your lender, or having the convenience of making a single monthly payment instead of multiple payments. Consider using an industry-leading private lender such as ELFI for a fast loan prequalification experience (in as little 2 minutes!) that can get you the student loan funding you need.

What Factors Should I Consider When Deciding on a Student Loan Refinance?

A few of the factors most graduates need to consider when refinancing their student loans have to do with not only payment size, interest rates and terms, but also the type of loan they will refinance into and their own personal financial situation. Keep in mind how this may improve your ability to get better terms or rates on your current loan or on any new student loans you end up pursuing after your refinance in order to go back to school. For example, many graduates considering a student loan refinance in order to go back to school don’t know that there is no federal student loan refinancing program. Both private and federal student loans can be refinanced with a private lender, but neither federal nor private loans can be refinanced into new federal loans. What you started with is what you get when it comes to your federal student loan - unless you refinance with a private lender. Federal student loan rates are set by the US congress and mandated by law - you can’t get a better deal or any rate concessions the way you might be able to do with a private lender. Another big factor when it comes to deciding on a student loan refinance is your personal financial situation. While this is often the first question that graduates looking at a student loan refinance ask themselves, it should be asked again - can you afford new student loans to go back to school, even if you get the refinancing terms and rates you want for your current student loans?

How Do I Choose the Right Time to Refinance My Student Loans?

Some financial experts and financial bloggers, such as NerdWallet, suggest refinancing the minute you have the credit score and income to support getting a lower interest rate, regardless of whether you want to go back to school and take on new loans in the process. Beyond this, and the obvious timing issues presented by deciding on whether, or when, to go back to school, be aware that your income, credit score and debt situation will have an overall impact on whether you can get the student loan refinance terms you want. Making sure to weigh all your options and pick a reliable lender who can help walk you through all your loan options. ELFI’s personal Loan Advisors are trained to help you navigate this process and to simplify it for you.

How Do I Choose the Right Student Loan Refinancing Option?

While there are many reputable student loan refinance providers available, expert and impartial voices like NerdWallet and Student Loan Sherpa agree that ELFI (Education Loan Finance) is one of the best. With multiple loan options, flexible repayment structures, and best-in-class customer service, ELFI can make your dreams of refinancing your student loans and going back to school a reality. ELFI also goes a step beyond and provides each borrower a personal loan advisor to help them navigate the process.

Final Thoughts

No matter what your degree field or career aspirations, most graduates will be faced with the choice of whether to refinance their student loans, when to do it, and how to do it in a way that fits their lifestyle. Using a reputable student loan refinance company like ELFI can help you pick the best student loan refinancing option for you, especially if you intend to take out new loans and go back to school. Check ELFI out today for the best and latest in student loan refinance options and get on the road to the career of your dreams! ¹Subject to credit approval. Terms and conditions apply. Note: Links to other websites are provided as a convenience only. A link does not imply SouthEast Bank’s sponsorship or approval of any other site. SouthEast Bank does not control the content of these sites.