Should You Consolidate Student Loans With Your Spouse? A Guide

Married couples can't consolidate federal student loans through the government anymore. Although this option existed under a previous program, private student loan refinancing is currently the only option for consolidating student loans with your spouse.

This guide will explain the logistics of spouse student loan consolidation, pros and cons of consolidating with a spouse, and alternatives to consider.

Can you consolidate student loans with your spouse?

In the past, the government offered married borrowers the option to consolidate their separate federal loans into a single loan. However, that option is no longer available.

Currently, federal loans don't allow for consolidation of your loans with a spouse. Instead, you must work with a private lender to refinance your loans if you want to consolidate them.

Private lenders may allow you to consolidate your and your spouse's student loans into a single loan. But if you refinance your existing federal loans into private student loans, you'll lose the borrower protections embedded in federal student loans. For example, you'll lose access to forgiveness programs and income-driven repayment plans.

How does joint student loan refinancing work?

If you want to pursue a joint private student loan through refinancing, use the steps below as a guide:

• Review loan details: Start by reviewing details across your and your spouse's loans. If you haven't already, now is the time to get all student loan details out on the table.
• Consider your options: Refinancing with a spouse into a private student loan doesn't always make sense, especially if either of you have federal student loans.
• Compare offers across lenders: Few lenders offer the chance to refinance your student loans with a spouse. But it's still important to compare rates across all available options.
• Apply with the lender you choose: After comparing rates across lenders, finalize your application with the lender of your choice.
• Start making single payments: Once the loan closes, you can start making payments on your newly combined loan.

Current student loan refinance rates

Pros of refinancing student loans with a spouse

If you consolidate student loans with a spouse, you may be able to enjoy the following advantages:

• Simplified repayment with one loan: After combining your loans, you'll only have to keep up with one monthly student loan payment in your household.
• Potentially lower interest rate: In some cases, refinancing your loans can lead to a lower interest rate, which means you'll pay less over the life of the loan.
• Better terms for couples with strong combined credit: If one or both spouses have good credit, this could lead to better loan terms.
• Creating a shared goal: With one loan balance, you can work together with your spouse to eliminate this debt.

Cons of refinancing student loans with a spouse

Of course, there are some disadvantages to joint student loan refinancing to consider:

• Loss of federal loan benefits: When you refinance federal loans through a private lender, you'll lose key borrower benefits and protections. For example, you can't tap into income-driven repayment plan options if your financial situation changes. 
• Shared responsibility for repayment: Refinancing into a single payment means you'll both be responsible for repaying the total loan amount, even if one partner hasd a lower balance than the other.
• Challenges if marital circumstances change: If you split up, managing one joint student loan might get messy.
• Limited lending options: Very few lenders offer this option, which could make it challenging to complete this goal.

Tips for deciding whether to refinance student loans with your spouse

As you weigh your options, use the following tips to help you navigate this financial choice.

Look beyond the financial impact

“Refinancing into both names is really a legal construct, but probably doesn't have a practical impact unless they can lower the payments when looking at the household together,” says Jack Wang, a wealth advisor at Innovative Wealth Management who specializes in financial aid and student loan payment strategies.

“However, refinancing, or not, can create feelings of inequity or fairness, jealousy, and similar,” Wang continues. “Bottom line is that trying to decide if you should refinance with your spouse seems like a financial decision, but it really goes beyond that.”

An honest conversation, or series of conversations, about your emotions and the financial impact of choosing to refinance together, or not, is essential. For many, seeking out a repayment strategy that doesn't cause marital discord is a priority.

Use a loan calculator to compare costs

“Simply run the numbers to see if you can save money,” says Brett Holzhauer, a certified personal finance counselor who says he's refinanced his own student loans six times.

“You can use a refinancing calculator online to see how much you can save over the remaining life of the loan,” adds Holzhauer.

Consider individual and combined credit

If both you and your spouse have good credit, then refinancing together or separately might not have a big impact on your loan terms.

But if one individual has good credit and the other spouse has less-than-ideal credit, then refinancing together could help at least one spouse tap into more attractive terms.

Consider your loan types

When refinancing federal loans through a private lender, you'll lose access to important borrower protections. Notably, you'll miss out on income-driven repayment options and forgiveness opportunities. For many, giving up these protections isn't worth the refinance.

Weigh the risks of combining debts

When you combine debts, both spouses become legally responsible for repaying the entire loan balance.

No one plans on getting divorced. But if it happens, combined student loans can create a tricky financial mess to sort out.

Alternatives to consolidating student loans with a spouse

Consolidating your student loans with a spouse offers one way to manage the student loans in your household, but it's not the only choice. Consider the alternative options below:

Individual refinancing to lower rates

You don't have to refinance both your loans into a single loan to reap the rewards of refinancing. Consider refinancing on an individual basis to tap into potentially lower interest rates. If one or both of you can lock in lower interest rates, your household will pay less in interest charges.

Income-driven repayment plans for federal loans

Federal student loans offer income-driven repayment plans, which set your payments based on how much you earn. The size of your payment takes many factors into consideration, including your income and family size. In some situations, your monthly payment might be as low as $0 per month.

For households struggling to make ends meet, this is an especially attractive solution. But if you refinance your federal loans with a private lender, you'll lose access to this perk.

Keep loans separate for more flexibility

If your marital circumstances change, untangling your loans can get complicated. After all, a joint loan means you'll both be responsible for repaying the entire sum. In the event of a divorce or financial loss, being stuck with a joint loan might become a problem.

Become cosigners on each other's loans

When you cosign someone else's loan, you become legally responsible for repaying the loan. For spouses who want to take legal responsibility for each other's loans, refinancing your loans individually with your spouse as a cosigner is an option.