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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 CreditCards.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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Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.

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2020-03-25
Current LIBOR Rate Update: March 2020

This blog provides the most current LIBOR rate data as of March 17, 2020, along with a brief overview of the meaning of LIBOR and how it applies to variable-rate student loans. For more information on how LIBOR affects variable rate loans, read our blog, LIBOR: What It Means for Student Loans.

 

What is LIBOR?

The London Interbank Offered Rate (LIBOR) is a money market interest rate that is considered to be the standard in the interbank Eurodollar market. In short, it is the rate at which international banks are willing to offer Eurodollar deposits to one another. Many variable rate loans and lines of credit, such as mortgages, credit cards, and student loans, base their interest rates on the LIBOR rate.

 

How LIBOR Affects Variable Rate Student Loans

If you have variable-rate student loans, changes to the LIBOR impact the interest rate you’ll pay on the loan throughout your repayment. Private student loans, including refinanced student loans, have interest rates that are tied to an index, such as LIBOR. But that’s not the rate you’ll pay. The lender also adds a margin that is based on your credit – the better your credit, the lower the margin. By adding the LIBOR rate to the margin along with any other fees or charges that may be included, you can determine your annual percentage rate (APR), which is the full cost a lender charges you per year for funds expressed as a percentage. Your APR is the actual amount you pay.

 

LIBOR Maturities

There are seven different maturities for LIBOR, including overnight, one week, one month, two months, three months, six months, and twelve months. The most commonly quoted rate is the three-month U.S. dollar rate. Some student loan companies, including ELFI, adjust their interest rates every quarter based on the three-month LIBOR rate.

 

Current 1 Month LIBOR Rate - January 2020

As of Monday, March 17, 2020, the 1 month LIBOR rate is 0.75%. If the lender sets their margin at 3%, your new rate would be 3.75% (0.75% + 3.00%=3.75%). The chart below displays fluctuations in the 1 month LIBOR rate over the past year.

 

(Source: macrotrends.net)

   

Current 3 Month LIBOR Rate - January 2020

As of Monday, March 17, 2020, the 3 month LIBOR rate is 1.05%%. If the lender sets their margin at 3%, your new rate would be 4.05% (1.05% + 3.00%=4.05%). The chart below displays fluctuations in the 3 month LIBOR rate over the past year.

  (Source: macrotrends.net)  

Current 6 Month LIBOR Rate - January 2020

As of Monday, March 17, 2020, the 6 month LIBOR rate is 0.91%%. If the lender sets their margin at 3%, your new rate would be 3.91% (0.91% + 3.00%=3.91%). The chart below displays fluctuations in the 6 month LIBOR rate over the past year.

  (Source: macrotrends.net)  

Current 1 Year LIBOR Rate - January 2020

As of Monday, March 17, 2020, the 1 year LIBOR rate is 0.86%. If the lender sets their margin at 3%, your new rate would be 3.86% (0.86% + 3.00%=3.86%). The chart below displays fluctuations in the 1 year LIBOR rate over the past year.

  (Source: macrotrends.net)  

Understanding LIBOR

If you are planning to refinance your student loans or take out a personal loan or line of credit, understanding how the LIBOR rate works can help you choose between a fixed or variable-rate loan. Keep in mind that ELFI has some of the lowest student loan refinancing rates available, and you can prequalify in minutes without affecting your credit score.* Keep up with the ELFI blog for monthly updates on the current 1 month, 3 month, 6 month, and 1 year LIBOR rate data.

 
 

*Subject to credit approval. Terms and conditions apply.

 

Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.

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2020-03-18
How to Plan a Wedding While Paying Student Loans
By Caroline Farhat   Congratulations, you’re engaged! Planning a wedding is an exciting time! From choosing your attire to picking out a venue and decor, there are a lot of decisions to make and many that can be costly. If you’re starting to plan your big day, you might be wondering how you’ll pay all of these extra expenses while still paying your student loan debt and regular bills. Don’t worry, we’ve got your back! Read on for some tips on how to plan a wedding with student loans on your radar.    

1. Set Realistic Expectations

A majority of the costs for a wedding are based on the number of guests, so you can save money by keeping your guest list relatively small. For example, if you plan a wedding for 350 people you will most likely need a bigger venue than you would for 100 guests. Venue costs typically account for one-third of ceremony and reception costs so this can be a major budget buster. Food and beverage and wedding favors are also typically charged per person. Because weddings can be expensive and extravagant or budget-friendly and low-key, it’s critical to discuss your desires and budget with your partner before you start planning.  

Here are some good points to discuss:

  • Parameters for the guest list: Do you want to invite your college roommate you haven’t seen in three years and every cousin on your partner’s side? Or are you looking for a more intimate affair with just your closest family and friends? 
  • Your near-term financial goals (besides the wedding): Are you saving for a down payment for a home? Considering starting a family? Understanding your joint financial goals is a great way to guide your expectations. 
  • Location of the wedding: Agreement on location is key because it will drive all of your other planning. If you’re eyeing a destination wedding and your partner wants a backyard wedding, you will want to understand each other’s individual desires so that you can create a joint wedding that makes both of you happy!
 

2. Set a Budget and Stick to It

Before you plan a budget, it helps to know who will be contributing to the wedding costs. Will you be paying for wedding expenses equally with your partner? Do any family members want to help with costs? This information can help shape your budget.     The average cost of a wedding in 2019 was $28,000 according to The Knot 2019 Real Weddings Survey. This figure only accounts for the ceremony and reception and can vary widely depending on your location. When you add in the average costs of an engagement ring ($5,900), a honeymoon ($5,000), and other wedding events such as the rehearsal dinner, bachelor/bachelorette parties, and engagement parties, the actual wedding costs can be much higher. If these numbers are making you want to elope in Vegas, don’t panic. There are some ways you can try to lower the cost of a wedding: 
  • Going DIY - DIYing at least some elements of the wedding can save you a good chunk of money. If you’re a Pinterest aficionado, try creating your own wedding invitations or centerpieces. Better yet, homemade wedding favors would be extra special for your guests and can save you hundreds of dollars.
  • Barter - Do you have friends that are photographers, florists, musicians, or bartenders? Bartering can help keep your expenses down while still getting the services you need. 
  • Timing - Are you dead set on having a June wedding or are you more flexible? In some areas, the month you pick can have a big impact on cost! Typically, June is a higher cost since it’s considered peak season, while winter weddings tend to be less expensive. Additionally, having your wedding on a Friday or Sunday can save you some money compared to a Saturday wedding. 
  Tip: It’s important to keep in mind that most wedding vendors do not require full payment upfront. Many vendors require a downpayment to secure their services and final payment closer to the wedding date. Open a separate bank account or flag any money you set aside for final wedding payments so that it doesn’t get used for other expenses that might pop up.   

3. Cut Expenses

In the midst of all the wedding costs, it may seem like any money you had leftover at the end of the month is now going towards the wedding. If money gets tight, think of ways to cut expenses: 
  • Refinance your student loans: Refinancing can be a great way to get extra cash now and set you and your partner up for a better financial future. Refinancing can save you on your monthly payment, as well as save you on interest costs over the life of the loan. For example, if you have a $35,000 loan with an 8% interest rate and get approved for an interest rate as low as 3.99% you could be saving up to $70 per month and over $8,000 in interest costs. Check out our student loan refinance calculator to see how much you could be saving.*   
  • Cut cable or cell phone bill: If you still have cable, it’s easier now than ever to cut the cord and still watch the shows and sports you want to see. Still paying a high cell phone bill? Compare carriers and call your existing provider to see if you can lower your bill.  
  • Reduce eating out or other entertainment expenses: It may not seem easy or fun to stop eating out or to cut back on entertainment, but reducing these expenses now could be just what you need to afford the band or DJ you really want at your wedding. 
 

4. Start a Side Hustle

A side hustle is a way you can earn money outside of your day job. The possibilities for a side hustle are endless: You could babysit, walk dogs, pick up a part-time job, etc. The extra money can help pay for your wedding expenses or you could put it towards your future financial goals. Earning extra money is not only helpful during wedding planning when you will experience extra expenses, but it can also help you after the wedding to make additional payments on your student loans, save for a new car or fund a dream trip.   

Bottom Line

Planning a wedding with student loans can be a stressful time. Don’t let your student loans be a part of the stress. With realistic expectations and a budget, you can manage to have the wedding of your dreams while still paying down your student loan debt!   
  *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
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2020-03-17
#TorchStudentDebt Series: CMO Josh Phillips
Welcome to the first episode of our #TorchStudentDebt blog series! At ELFI, our goal is to empower a brighter future for those with student loan debt. We do this by offering competitive rates and flexible terms for student loan refinancing* as well as sharing helpful tips for helping you achieve financial freedom. In this exclusive blog series, we’re sharing the stories of individuals who have torched their student loan debt, covering everything from the challenges they faced to the tactics they used to eliminate their debt. Hopefully these experiences can provide you with some insight on how you can eliminate yours.   To kick this series off, we’re sharing the story of Josh Phillips, SouthEast Bank’s Chief Marketing Officer. Note: SouthEast Bank is the parent holding company of Education Loan Finance.   

Background

Josh is a Brimley, Michigan native that decided to go to college for the same reason that many of us do – to learn and make more money. His first job was picking up shingles around construction sites for his father, who was a licensed builder. He worked at McDonald’s through high school, handing out food in the drive-thru and eventually moving up into the role of “maintenance man,” being in charge of facilities around the building.  
“The variety of jobs I had growing up taught me a lot… although I did enjoy some parts of them, I also knew that they weren’t what I wanted to do for the entire adult experience.”
  Like a good portion of millennials, Josh was a first-generation college student. This left him in somewhat of uncharted territory when it came to choosing a college and acquiring financial aid.  
“Being the first person in my family to go to college, I didn’t really have any idea what I was doing in terms of the best way to approach it. This was in the early 2000s, so there were some resources online to help guide you through the process, but not nearly the amount of resources as there are now on the internet.”
  Josh used the U.S. News and World Report college tool to do his research, made a shortlist of schools, and began applying and going on college visits. He ultimately decided to attend Maryville College (TN), a private liberal arts college in East Tennessee.   

Taking Out Loans

Going into college, Josh took the same view of his loans that many of us do – putting off the worry until after school.  
“I definitely didn’t actively think about the amount of debt I was accruing throughout my college education. Four years seemed like a ways away, so I kind of took the approach of, ‘do what you have to do to get the education and experience you want,’ and worry about those minor details afterward.”
 

Facing Reality

Josh graduated with a double major in International Business and Political Science, but he also graduated with around $55,000 in student loan debt that consisted of both federal and private student loans.   
“At that point in time, I had loans in a variety of places – so it was kind of like this slow, painful trickle of letters coming in telling me how much I owed different lenders. I wouldn’t say it was completely demoralizing, but it definitely made me understand that this was going to be one of the major payments that I’d be making on a monthly basis for a good length of time.”
  This was in 2008, right before the bottom fell out of the market. Josh was lucky to find a job with a small startup prior to graduating and transitioned into that after school. He believed that working for a startup would give him the opportunity to potentially grow with the company and accelerate his career faster, but it was definitely a roll of the dice.  
“I heard the rule that you shouldn’t go into more student debt than what your first year’s salary will be upon graduation… well, I broke that rule.” 
  The startup Josh worked for was a marketing and advertising agency that was going through a transition from traditional marketing to digital marketing. Josh was an Account Manager and had the opportunity to work with a number of their larger, newer customers and also assist with general business operations.   

Strategy for Paying Down Debt

When Josh transitioned into his new role, he didn’t have much of a strategy for paying down his debt. He simply wanted a job that allowed him to meet the minimum monthly payments and afford his living expenses. As his role within the company grew, he began focusing more heavily on ways to eliminate debt.     Using these strategies, Josh was able to pay down his $55,000 in student loan debt in just seven years.  

Regrets Along the Way

Despite the impressive timeframe in which Josh paid off his student loans, he did mention that he had some regrets about how he went about it.   
“Looking back, I took out extra money to cover living expenses while I was in college… If I had to do it again, I would have probably tightened those purse strings more when I was in school, because living on borrowed money just costs you more and more over time.”
  He also mentioned that he wished he would have known about his ability to refinance student loans and lock in a better interest rate. He said that doing so would have allowed him to save on interest and possibly even extend his repayment period so that he could prioritize other financial goals, like saving for retirement.    In hindsight, he also wished he would have looked into scholarships and financial aid earlier in the process, as many others with student loan debt do.  

Being Debt-Free

As one would assume, Josh is happy to now be free from his student debt.   
“I mean, it’s great – I think any time you can eliminate debt, it just opens up new options. Whether you want to go into more debt for a new car or a bigger house, or maybe you just want to get to the point where you don’t owe anyone anything, paying down debt almost gives you a bit of a high. It’s great to see the number going down, and once it’s gone, you kind of want to turn around and figure out what you want to pay down next. Currently, my last debt is my mortgage.”
 

Advice for Others with Student Loan Debt

When asked what advice he would give others with student loan debt, Josh emphasized the trade-off of having great experiences vs. being debt-free.  
“Everyone loves doing new things and getting new experiences, but I would always counter that with the freedom you can feel from getting out of debt. There are plenty of things you can experience for free if you’re creative or thoughtful about how you do it… If you’ve got debt that keeps you worried or at a job you don’t like, it’s a good trade-off to delay your experiences and instead put that money toward your own financial freedom.”
 

#TorchStudentDebt

That wraps up our first #TorchStudentDebt blog! Stay tuned for more stories of how others put strategies in place to torch their student loan debt, challenges they faced along the way, and advice they have for others still on their student loan repayment journey. Thanks for reading!  
 

About Education Loan Finance

Education Loan Finance, a division of SouthEast Bank, is a leading online lender designed to assist borrowers by consolidating and refinancing private and federal student loans into one simple, low-cost loan. Education Loan Finance believes that providing consumers comprehensive refinancing and consolidation options empowers the consumers on their financial journey.    *Subject to credit approval. Terms and conditions apply.   Notice About Third Party Websites: Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – the bank is not responsible for the content. Please contact us with any concerns or comments.
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