Can you consolidate student loans with your spouse?

Consolidating student loans with your spouse can help you manage your finances more easily and potentially lower your interest rate. (iStock)

Americans owe more than $1.7 trillion in student debt, according to Federal Reserve data. If you and your spouse fall into this group, you may consider consolidating your student loans together. 

Instead of both of you having to manage monthly payments on each of your loans, you’ll have a single monthly payment that’s easier to handle. You might even be able to reduce the interest rate you’re paying. 

Let’s look at when you may want to consolidate student loans with your spouse, and what to consider before you do.

You can use Credible to compare student loan refinancing rates from various lenders in minutes.

• Can you consolidate student loans with your spouse?
• When should you consolidate student loans with your spouse?
• How to consolidate student loans with your spouse
• What are the requirements to consolidate student loans with your spouse?
• Benefits of consolidating student loans with your spouse
• Drawbacks of consolidating student loans with your spouse
• Is consolidating student loans with your spouse a good idea?

Can you consolidate student loans with your spouse?

In many cases, yes, you can consolidate student loans with your spouse. The specifics depend on the types of student loans you each have. 

If you have federal student loans, you won’t be able to consolidate them with your spouse’s into a federal Direct Consolidation Loan. But you may be able to refinance them into a private student loan that you jointly hold. If you each have private loans, these can also often be refinanced into a new private loan.

Student loan refinancing vs. federal student loan consolidation: What’s the difference?

Student loans come in two varieties: federal and private. The U.S. Department of Education issues federal student loans, which have a number of special features, like income-based repayment plans and forgiveness options. Federal student loan interest rates are set by law. The federal government offers a Direct Consolidation Loan for people looking to combine multiple federal loans into one. 

Private loans come from banks or other lenders. They generally don’t have as many repayment options, don’t offer forgiveness, and interest rates are determined by market conditions and your credit score. You can generally consolidate private loans by refinancing. In most cases, private lenders will allow you to refinance federal and private loans together. If you’re looking to consolidate all your loans into one, refinancing is likely the best way to do it.

When should you consolidate student loans with your spouse?

After you get married, it may make sense to consolidate student loans with your spouse in a number of situations, including:

• Your financial situation has improved. If your finances have improved since you and your spouse first took out your student loans, you may qualify for a lower interest rate than you’re currently paying. Refinancing into a new loan with a lower rate may save you interest over the life of your loan.
• You’re having trouble managing payment dates. It can be a hassle keeping track of numerous loans with varying balances and due dates. Consolidating into a single loan with one payment and due date can make it easier to budget.
• You need more time to pay your loan. When you refinance student loans, you can often choose to extend your repayment term, which can lower your monthly payments. As you set up your joint budget, this can be a good option. Just remember, though, that extending a repayment term means you’ll likely pay more in interest over the life of the loan.
• You’re handling finances jointly. Many married couples choose to combine bank accounts and other finances. It may make more sense for your budget to have a combined student loan as well.

Consolidating vs. cosigning student loans with your spouse

Instead of consolidating student loans with your spouse, you may also consider cosigning your spouse’s loans instead. When you cosign a loan, you’re agreeing to be equally responsible for the loan. As a cosigner, your finances are taken into account along with the primary borrower, meaning you may qualify for a lower interest rate than you would individually. But cosigning a loan doesn’t consolidate any loans together. 

How to consolidate student loans with your spouse

If you’re interested in consolidating student loans with your spouse, these are the steps you should take:

• Examine your current student loans. You and your spouse should take inventory of your current student loans, including your monthly payments, outstanding balances, interest rates, due dates, and repayment terms. You should also determine the weighted average of the interest rates you’re currently paying. To do this, multiply each loan amount by the interest rate, add them together, and then divide by the total amount of debt outstanding. For example, if you have a $30,000 loan at a 5% rate, a $15,000 loan at a 7% rate, and a $10,000 loan at a 9% interest rate, your weighted average would be 6.3%.
• Shop around for refinance loans. Most student loan refinance companies post interest rate ranges on their website and information on who qualifies for their loans. You can make a list of lenders that may work for your situation.
• Prequalify with several lenders. Student loan lenders generally allow you to get a rate quote or prequalify for a loan by submitting a short form, often including your Social Security number. The lenders will perform a soft credit pull to assess your financial situation, which shouldn’t affect your credit score. You can use the rates and terms quoted from each lender to compare with the average rate you’re currently paying. If you can qualify for a rate lower than you’re currently paying, it may make sense to refinance.
• Select a lender and apply. Look closely at the interest rates you’re offered, as well as repayment terms and monthly loan payments, to see which one fits best within your budget. The lender you choose will send you information on how to move forward with a full loan application. This may include sending in more documentation of your assets and income.
• Accept your loan. Once you’re approved for a loan, your lender will instruct you on what to do to make sure your current student loans are satisfied. Be sure to make your payments as usual on your current loans until you’re notified that they’re paid off.

With Credible, you can compare student loan refinance rates without affecting your credit.

What are the requirements to consolidate student loans with your spouse?

Requirements to consolidate student loans with your spouse vary by lender, but typically include a few of the following:

• You must have graduated from an accredited college or university.
• You must be employed or have an offer for a job that begins soon.
• You must have a steady monthly income.
• You must have a solid credit history.
• You must be a U.S. citizen or permanent resident.

Some lenders may require you to have a minimum loan balance to be eligible for refinancing. Others may require that you’ve made a certain number of on-time student loan payments before refinancing.

Can consolidating student loans with your spouse hurt your credit?

It can. Once you consolidate student loans with your spouse, their loan amounts are now yours as well. A large amount of outstanding debt can lower your credit score. Applying for new loans also temporarily dings your credit, so your refinance loan will have a small effect for a period of time. Making on-time payments on your new refinance loan should counteract that impact.

Benefits of consolidating student loans with your spouse

Consolidating your student loans with your spouse’s loans can have a number of benefits, including:

• You may lower your interest rate. If your financial situation has improved, you may qualify for a lower interest rate than you’re currently paying on your student loans. This will reduce the total amount you’ll pay over time.
• You’ll have one payment. Keeping track of numerous loan amounts, payments, and due dates can be a challenge. Consolidating loans leaves you with one loan payment that's easier to manage.
• You can adjust the length of your loan. When you refinance, you may have several options for your new repayment term. With a longer repayment term, your monthly payments will likely be lower. Shortening the length of the loan will increase your monthly payment, but you’ll get out of debt faster and pay less interest over the life of the loan.

If you’ve decided to consolidate your student loan debt with your spouse, Credible lets you easily compare student loan refinance rates from various lenders.

Drawbacks of consolidating student loans with your spouse

Like any major financial decision, consolidating student loans with your spouse has some drawbacks as well:

• You may lose benefits. If you have federal loans, you’ll lose any special repayment plans or loan forgiveness benefits by refinancing into a private loan.
• Your interest rate may not be lower. If your spouse’s credit isn’t as good as yours, you may not qualify for as low of an interest rate as you would on your own. If market conditions change, your interest rate may also be higher than you’re currently paying.
• Your credit score may drop. Adding a significant amount of debt can negatively affect your score.

Is consolidating student loans with your spouse a good idea?

Consolidating student loans with your spouse can be a good idea as you combine your finances. You might be able to get a lower interest rate and tackle your debt more quickly or with a lower monthly payment. It can also make your monthly budget easier to manage, with just a single loan payment and due date. But consolidating student loans with your spouse might not be the best option if:

• One of you has a much lower credit score. The new interest rate you’ll qualify for will be based on both credit scores. If your spouse’s score is significantly lower than yours, the resulting interest rate may be higher than what you’re currently paying on your loans.
• You have federal loans. Federal student loans have unique repayment plans, like income-contingent repayment and loan forgiveness benefits, that you’ll lose if you refinance into a private loan. Your new loan repayment plan may not be as generous.
• You think you may need to untangle the loans later. Splitting up a refinanced loan is often more difficult if you get divorced. If you’re concerned that your marriage won’t last, it might not make sense to consolidate student loan debt together.