Student Loans: What I Wish I Knew Before Marriage

My husband and I met in dental school and started dating in our final trimester, much to the surprise of our friends and faculty. We truly represent the saying “opposites attract” and we definitely had different philosophies when it came to spending money. In the beginning of our relationship it was easy to dismiss my financial situation, but once we knew we were getting married, the pressure was on to come together and make a plan to pay off my student loans. Having those conversations and figuring out how to tackle my debt was a huge challenge for us, but one that ultimately brought us closer together and helped me learn the following important lessons.

READ THE FINE PRINT (RESEARCH YOUR LOAN OPTIONS)

When I think back to the start of dental school, I can’t think of a specific time when I signed on the dotted line for my student loans. Sadly, I don’t even remember thinking about the cost of tuition. My only thought was, “I want to go to dental school and this is how it’ll be possible.” I assumed that was the normal progression: take student loans, graduate dental school, pay loans back. I didn’t consider it to be an obstacle. Of course, I also never considered how drastically the student loan climate had changed over just the last 5-10 years.

THINK ABOUT REPAYMENT OPTIONS LONG BEFORE GRADUATION

During dental school, I remember having ONE lecture right before graduation on the different options for loan repayment. The conclusion? Income-driven repayment plans are the way to go. They seemed to be the only solution for living a normal lifestyle (i.e. buying a house, supporting a family, owning a private practice) and still making loan payments. With an income-driven repayment plan, I could make a manageable monthly payment and in 20-25 years the government would forgive the rest of my loans. One caveat, however, I would owe a sizeable lump sum at the end of the 20-25 years (as taxable income). Thinking back, the lecture didn’t mention refinancing as an option or suggest paying down the loans as soon as possible. I didn’t even know the benefit of paying off interest before it capitalized. Once I graduated, I immediately signed up for PAYE (pay as you earn) like the majority of my classmates and then didn’t give my loans much thought. That is until my then boyfriend got down on one knee and asked me to marry him.

HAVE IN-DEPTH CONVERSATIONS ABOUT MONEY BEFORE MARRIAGE

Mr. Debt Wise Dentist knew I had taken out full loans for school. However, I don’t think he realized that, with interest, the total had accumulated to nearly $525,000! Half a million dollars! Here he was a debt-free man about to take on half a million dollars’ worth of debt with his future wife. It was definitely a source of embarrassment for me as we started to discuss our financial situation. It felt awful to be the one bringing so much debt to the table and for that reason I think I avoided the conversations. We had a few general talks about money and then didn’t think about it again for a while.

SPEND LESS ON A WEDDING

For about 10 months we directed our attention to planning our wedding, paying about $30,000 of our own money. When the wedding was over and we were officially a married couple, reality started to sink in. It felt like my husband suddenly had hundreds of questions about my student loans. How much is your principal again? How much have you paid in interest? Wait, all that money went to interest??! When we started to look at the numbers in detail, it was incredible to see that in the three years since I graduated, I had paid about $21,000 of interest and only $5,000 toward the principal. In that time, I could have easily been paying only interest, but I had knocked out a couple of my small $1-2K loans. In the course of 3 years I had only paid $26,000 toward my loans and we had just dropped $30,000 on one day.

REFINANCE EARLY

The loans started to weigh down on us. I saw how, psychologically, we couldn’t stay on income-driven repayment for 20-25 years. We wanted to launch our careers and start a family without a monthly loan payment year after year. Call me paranoid, but I also didn’t like the idea of relying on government loan forgiveness. A lot can change in 20-25 years! We started to work together and develop a plan to pay off our debt. We crunched the numbers using this helpful tool Loan Repayment Estimator and compared with different refinance options. See in more detail how we decided to refinance here.

PAY LOANS AS FAST AS POSSIBLE

Once the decision was made, the process of refinancing seemed simple enough. Unfortunately, it actually took us THREE attempts before a loan application was accepted. With $524K of debt, my debt-to-income ratio was too high for many companies—even with a cosigner! It was a huge relief when our loan request finally got approved and all I could think was, “why didn’t I do this sooner?” Now that we have our plan in place, we can finally pay down the loans as fast as possible and work toward being debt free.

Although student loans gave me a lot of stress (in and out of our relationship), in the end they were instrumental in helping us band together and take charge of our financial future.

Have you brought debt into your marriage? How did you and your spouse handle the situation? Comment below!