If you are married and you and your partner have educational debt, you may want to consolidate student loans with your spouse. But, before you move forward, you need to know the rules for when you can do this and consider the pros and cons.
This guide will explain when you can combine student loans with your spouse and offer insight into some key considerations about making this financial move.
Can you consolidate student loans with your spouse?
Answering the question of whether spouses can combine student loans can be complicated. It depends on your educational debt and the process you want to use to combine the loans.
The Department of Education allows the consolidation of federal student loans without losing federal aid benefits such as flexible repayment schedules. Unfortunately, joint consolidation loans were eliminated by Congress in 2005. If you are interested in federal debt consolidation, you cannot consolidate student loans with your spouse.
How to combine student loans with spouse
Although you cannot combine student loans with your spouse using the Department of Education’s debt consolidation process, it is still possible to combine multiple student loans from each partner. You will just need to use a private student loan lender to do it.
Private student loan lenders can refinance both federal and private loans. Many lenders allow you to combine your debts with your spouse. You can take out a large refinance loan to pay off both of your existing student loans. You may qualify for a refinance loan at a lower rate.
However, remember that private student loans are different from federal student loans. If you refinance federal loans with a private lender, you lose access to many benefits, including:
- Public Service Loan Forgiveness
- Income-driven payment plans
- Generous deferment and forbearance options
- The ability to change your payment plan as needed.
Most people do not, and should not, refinance federal loans because of this.
This means that the answer to the question, can spouses combine student loans, is that you technically can but should likely do this only with your existing private loans. If you have federal student loan debt, consolidating your loans with your spouse likely isn’t a good option. If you refinance student loans that are already private, you don’t lose any important benefits since you were already working with a private lender anyway.
Why you might want to combine student loans with your spouse
There are many reasons why you might potentially want to consolidate student loans with your spouse. Here are some possible reasons:
- To simplify repayment: It can be easier to repay your student loan debt if you have just one monthly payment to make instead of many. And you don’t have to decide which debt to prioritize.
- To reduce your rate: Refinancing could potentially lower the rate you are each paying on private loans. If one of you has better credit than the other, combining your loans could also help to make sure you both get the lowest possible interest rate on your refinanced debt.
- To better work towards joint financial goals: When you combine student loans with your spouse, there’s no longer separate debt. You have one joint goal you’re working towards.
You may also have other reasons of your own. The important thing is to go into the process with both eyes open and not just ask if you can consolidate student loans with your spouse, but also should you.
Pros and cons of combining your student loans with your spouse
Before you move forward with combining your student loans with your spouses, be sure to consider these pros and cons.
Advantages of combining student loans with spouse
The biggest benefits of combining student loans with your spouse include:
- Potentially reducing borrowing costs if you can qualify for a lower rate with a joint refinance loan
- Helping out a spouse with lower credit to be able to qualify for refinancing
- Simplifying the payoff process since you have one loan instead of multiple loans to pay back
- Getting on the same page with joint financial goals
- Potentially paying off debt faster due to the lower rate and your joint efforts
Disadvantages of combining student loans with spouse
And the biggest disadvantages of combining your student loans with your spouse are:
- You could lose federal borrower benefits if you refinance federal loans to combine them with your spouse
- You become jointly responsible for your partner’s debt
- Divorce could become more difficult and messier if you combine student loan
If you have considered these disadvantages and are still ready to move forward, be sure you do your research to find the right lender.
Find the Right Lender
When you look into which private loan refinancing company to work with, ask if spouses can combine student loans with that particular lender. And you may wish to compare joint and individual loan rates to see which type of refinancing plan could help you save the most money.
By researching loan options and finding the right lender to work with, you can ensure your student loan consolidation process goes smoothly and is the best financial move for you.
Frequently Asked Questions
What is the maximum amount you can pay back on your payday loan?
To ensure that you have enough cash in case you ever need it, you should always have an emergency fund. It shouldn’t matter if you have a strict budget and are careful with where you spend your money.
Is it possible to get a loan if you have a low credit score?
It all depends upon the type of loan that you need. If you are looking for an unsecured personal loan, you can still apply. A secured loan is one that you can apply for such as a loan to improve your home or finance your car.
You can improve your credit rating by paying off any debts on time. Your credit rating will improve if you pay more on your monthly repayments.
What loans can a person with bad credit get?
Many people have been turned away from getting a mortgage because they don’t have a perfect credit history. If you’re willing to lend a mortgage to someone with poor credit, there are many options to help them become homeowners.
A person may qualify for a low-interest rate loan based on his/her income and other factors. People with poor credit records can often find a way to pay off their debts at affordable rates using various adjustable-rate mortgages (ARMs).
Programs like the USDA Rural Development Loan Program provide loans for residents outside of urban areas. These loans are made available to rural areas with limited market access. The program offers long-term fixed rates of interest between 3% and 6 percent.
Specialized commercial lending companies specialize in lending low-income borrowers loans. These companies partner with community development organizations and local banks. Many of these companies do not charge any fees or have very low overheads.
How can I borrow money fast?
We are an online loan company that helps customers get loans for any reason. We offer short-term as well as long-term loans at very low interest rates.
Since 2010, we have been serving this community and have earned our reputation as an honest lender.
We ensure you get the right loan for you.
How are payday loan interest rates calculated?
When customers have poor credit and need quick cash, payday loans can be used to provide short-term credit.
These loans usually have interest rates between 300% – 1000%.
Interest rates on payday loan are usually based on the borrower’s credit score as well as their repayment capacity.
Higher credit scores mean lower interest rates.
If your monthly income is below $1,000, it’s best to avoid borrowing money.
If your monthly income is below this level, you might consider other financing options, such as personal loans.
If you earn more than $1,000 per month, looking into other options like credit cards, bank accounts, and auto loans is better.
What if I don’t have a credit check?
The answer to this question is yes! Here are 6 ways that you can get online loans without credit checks:
- CashNetUSA.com – Apply online for a payday loan – No Faxing, Waiting, and No Hassle. Simply approve and pay.
- LendingClub.com offers an online personal loan. Interest rates as low at 1%, no credit checks and bad credit OK.
- Prosper.com offers an online installment loan at 0% Intro APR for purchases and balance transfers within 60 days.
- AutoTitleLoans.net allows you to apply online for a auto title loan – get approved in less than 24 hours. Receive money within 2 hours.
- LendUp.com enables quick cash transfers into your account.
- BizLineLoan.com offers an online credit line for businesses. We offer over $100 million in financing options.
Statistics
- A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. (consumerfinance.gov)
- For example, CashUSA’s payday loan APRs range from 5.99% to 35.99%, placing them well within the averages for most major lines of credit, including credit cards and bank loans. (timesunion.com)
- In California, for example, a payday lender can charge a 14-day APR of 460% for a $100 loan.6 Finance charges on these loans also are a significant factor to consider, as the average fee is $15 per $100 loan.1 (investopedia.com)
- Those protections include a cap of 36 percent on the Military Annual Percentage Rate (MAPR) and other limitations on what lenders can charge for payday and other consumer loans. (consumerfinance.gov)
- By comparison, APRs on credit cards can range from about 12 percent to about 30 percent. (consumerfinance.gov)
External Links
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How To
Why do we require installment loans?
Installment loans, which are short-term loans, require a minimum monthly payment. They can last up to one-year and have flexible repayment options. This is very convenient as it allows you to repay the loan whenever you wish and has the ability to have the money at your disposal.
Most people who apply for these loans are looking to make some quick cash and don’t care too much about their credit score. If you are unable to qualify for traditional bank financing, then an installment loan may be an option.
Before applying for an instalment loan, be sure to consider how much you are willing to borrow. You need enough capital to cover the cost of interest and fees, plus another month’s worth of payments.
If you are approved to an installment loan, your funds will be sent within 24 hours. The application fee for an installment loan is typically $40. This service is usually charged by most lenders, so make sure to shop around until your find the best deal.
Installment loans are a great option if it’s difficult to pay your monthly bills on time. This type loan is for people who have poor credit scores and face financial hardship.
An installment loan is an option for those who have been rejected by traditional lenders and lack collateral. Your income, employment history as well your assets and debts are all factors that will be looked at by your lender. If you show them that you have the ability to repay the loan, they will approve you for a smaller amount than what you owe. You won’t be in a position to repay your entire debt instantly. Instead, each month you’ll pay off a part of your total debt.
Installment loans require that you repay the entire loan amount in full before any refunds can be granted. However, most lenders only offer grace periods during which you can delay making payments without incurring late charges.
