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BUSINESS Friday 7 February 2020
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Should your student loans and your spouse's get hitched?

By RYAN LANE of NerdWal- is known for," he says. have to pay a hefty spou-
let REFINANCING 'FOR WORSE' sal loan on your own. You
Multiple studies have If you co-sign a refinancing may owe the balance on a
shown that student debt loan or combine debts with co-signed loan as well, de-
can cause borrowers to your spouse, you're equally pending on a lender's poli-
delay getting married. For responsible for repaying cies.
some borrowers, though, the balance — even after — KNOW WHAT YOU'RE
marriage could actually be a divorce. GIVING UP. Once you refi-
a gateway to paying less. "There is no exit ramp," says nance loans, you can't get
You can save money by Joshua R.I. Cohen, a law- your original loans back. If
refinancing student loans, yer in West Dover, Vermont, you want or need federal
but not everyone quali- who operates TheStudent- loan benefits, like alternate
fies. If your better half has a LoanLawyer.com. repayment plans and for-
better financial profile, you For example, Cohen says a giveness programs, don't
can share the benefits of divorce decree could out- refinance them.
refinancing in two ways: line who's responsible for re- Cohen also says to make
— REFINANCE TOGETHER. payment, but both names sure the savings are worth In this April 3, 2019, file photo a tip box is filled with U.S. currency
You combine your student remain legally on the debt. it. "I would rather pay 2% in New York.
loans with your partner's That means if one spouse more in interest and know Associated Press
into one spousal loan with doesn't pay, the other still I'm not tied to this idiot for
a lower interest rate. suffers the consequences the rest of my life," he says. combined their loans via a
— CO-SIGN FOR YOU. Your of missed payments, like DON'T GET STUCK federal program that end-
spouse co-signs a loan re- damaged credit and col- Kathy Snell, 55, of Eugene, ed in 2006. Their loan isn't
financing your debt, get- lection calls. Oregon, would love to eligible for Public Service
ting you a lower rate on the Divorcees could refinance undo her spousal loan. But Loan Forgiveness, which
back of his or her finances. the loan or portions of it into it has nothing to do with her forgives the federal loans of
If you're considering get- their individual names to marriage. borrowers working for quali-
ting hitched to your part- get around this, but only by "We've managed even fying employers — like the
ner's loans, here's how to meeting a lender's income through all the financial University of Oregon, where
decide if you should. and credit qualifications on stuff to stay happily mar- Snell is an attending veteri-
REFINANCING 'FOR BETTER' their own. ried," Snell says. narian.
Refinancing makes the SHOULD YOU SAY 'I DO'? That "stuff" includes a joint Other federal borrowers
most sense to save money Still have cold feet about student loan that's grown can consolidate existing
on higher-interest private refinancing with your to almost $420,000. loans to eventually qualify
and graduate school loans. spouse? These steps may Snell and her husband for this program. q
For example, by refinanc- help protect you:
ing a $60,000 loan from 7% — TRY CO-SIGNING FIRST.
interest to 5%, you'd save Co-signing may have a
roughly $7,200 over a 10- valuable option that spou-
year term. sal loans lack: programs
Typically, you'll need robust that eventually remove
finances and a good credit your spouse from the loan.
score to qualify and get the Co-signer release policies
best rate. vary by lender; PenFed, for
Spouses may "increase example, doesn't release
(their) chances at getting a spouse co-signers.
better rate together," says — GET EXTRA LIFE INSUR-
Andrew Zoeller, digital pro- ANCE. Cover yourself if
gram director for Purefy, your partner dies and you
which refinances loans for
Pentagon Federal Credit
Union, or PenFed.
For joint spousal loans and
loans that spouses co-sign,
PenFed evaluates the cou-
ple based on their com-
bined income and counts
shared debts, like mortgag-
es, only once. This allows
more individuals — such as
stay-at-home parents with
good credit — to meet
PenFed's lending criteria.
Other lenders may evalu-
ate spouses separately. Ask
a lender about its policy
before applying.
In 2019, 67% of co-signed
PenFed student loan refi-
nances were spousal loans,
according to Zoeller.
"It's something our program