Financial Planning for Generation X & Y Women
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Expert Q&A Archive

How should my boyfriend and I deal with student debt before and after marriage?
I am a recent college graduate and am planning to return to school to pursue a PhD. I am also in a serious relationship that is moving toward marriage in the near future. We are both completely debt free at the moment and take our finances very seriously. However, my boyfriend is planning to pursue an advanced degree that will involve taking out several hundred thousand dollars in student loans. My education, on the other hand, should be almost entirely (if not completely) covered by fellowships. Before we marry, I am wondering what steps I could take to protect myself from responsibility for his debt in the event of a divorce (God forbid!). I know any debt he accumulates before the marriage would not be my responsibility, but since we are thinking of getting married before or during graduate school, the picture is more complicated. Also, I believe he should have some protection to safeguard his future, substantial income since he will be making much more than me for most, if not all, of our careers.

Any suggestions you have would be greatly appreciated. I hate to make such a big deal out of finances in the middle of something that is supposed to be romantic and blissful, but we respect each other enough to realize that this is important.
Gary Silverman, CFP®:
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Though not particularly romantic, your question is one that people should ask much more often than they do. My answer is short: hire an attorney. Someone needs to get to know both of your situations intimately and discuss with you the many possibilities here. Though not cheap, if anything should happen, your bringing in competent legal counsel at the outset to guide you through this will be worth every penny. And the peace of mind will be priceless.

Use the ideas and opinions you'll get to your question as an education, but have an attorney walk you through what will be best for you.
Joan Koonce, Ph.D:
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Whether or not you will be responsible for the debt depends on a couple of things. If you live in a separate property (also referred to as common law) state, and he obtains the debt in his name only, then you will not be responsible for his debt. If the debt is in both of your names, then you will still be responsible for the debt. In a divorce decree, judges can order him to pay the debt, but if he does not pay it, the creditor can still come after you to pay the money back. If you have to pay the creditor, then you will have to go back to court to sue him to recover the money that he was ordered to pay the creditor. If you live in a community property state, then any debt that is acquired after you are married, regardless of whose name it is in, is both the husband's and the wife's debt.
Dianne C. McCabe:
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I'm coming from the life insurance industry, and the following advice should definitely be on your "things to do list." I realize young couples tend not to think about life insurance protection, but consider where you will be in the next five years. Will you have a mortgage? Will you have a young family? You mentioned your future spouse accumulating a large tuition debt. The best time to purchase life insurance is when you are young and healthy! Term life insurance provides pure protection for a specific period of time to cover a mortgage debt, tuition debt, and preservation of lost income in the event either of you die prematurely! Once you have been approved for a life insurance policy, you can guarantee the premium to remain level for up to 30 years, no matter what happens to your health as you get older!

Typically, a 30-year-old non-tobacco-user can purchase a 30-year$300,000 life insurance policy for about $23.00 per month, a 30-year $500,000 policy for about $34.00 per month.
Martina A. Jimenez:
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Both of you need to consult with a financial planner. I would recommend that you look into life insurance protection for debt payoff and disability income coverage should be taken from a benefit offered through his job and a supplemental policy that he owns on his own. This would help pay off debt if death occurs and pay obligation on debt if disabled.

The issue would be if something happened, like disability or death, and how to handle the debt that has been incurred. You do not have to wait until marriage to get life insurance protection or disability coverage. Best regards.
Kris Freeberg:
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Work with an attorney to write a prenuptial agreement that expresses your desires. Bear in mind, however, that in the final analysis creditors tend not respect such agreements, not even formal court decrees. Their priority is wherewithal to pay.

Agreements are only as strong as the integrity of the parties who make them, and marriage is called "marriage" for a reason; it is an interdependent relationship in which boundaries like the ones you want often blur.
Vita S. Roth:
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Though it may not sound “romantic” I commend you on your forethought! You are right in communicating these concerns before getting married. Preparing for the future and coming to a mutual agreement before taking such a life-changing step will keep the fire burning in your relationship long after you “tie the knot”.

I would suggest the two of you speak with a minister of your faith(s), lawyer, and financial planner. Finding out your options and giving you food for thought from professionals who have experience and have “heard it all” would be a safe and wise decision.

It would be worth considering a prenuptial agreement. It may sound like a “way out”, but could possibly aid in the elimination of tension, speculation, and misunderstandings when moving to the next level of your relationship. Trust is such an integral part of marriage; and communicating freely about all aspects of your new life together will likely promote that trust, eliminate some of the guesswork, and help you both know what to expect from each other in the long run. I wish you both the very best in mapping out your future together!
Editor's Note:
Editor’s Note: A good resource is the 2003 book Think $ingle! The Woman’s Guide To Financial Security at Every Stage of Life!, by Janet Bodnar, Executive Editor of Kiplinger’s Personal Finance Magazine. In the first chapter of her book, Bodnar writes, “Thinking single has nothing to do with the state of marriage. Rather, it’s a state of mind in which you’re confident of your ability to support yourself financially if necessary, and comfortable with handling money—or seeking help if you need it. You can (and should) achieve this kind of financial independence regardless of your marital status.” Ms. Bodnar was a speaker on the Wi$eUp teleconference call on Facing a Financial Crisis, Part II, on November 30, 2005, which is posted on the Wi$eUp Web site in three different formats. Ms. Bodnar is also the author of Kiplinger’s Money Smart Women: Everything You Need to Know to Achieve a Lifetime of Financial Security (2006).
Bettye J. Banks:
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Good for you!

More marriages end in divorce over financial issues than any other! [issue], including infidelity, personal [issues] and substance abuse!!!

Of course you realize that any debt incurred by either spouse during the course of a marriage is the equal responsibility of BOTH spouses. It's all about acceptable risk.

I promise you excess and un-payable debt is not romantic, but one of the best uses of your credit dollar is a good solid education. If that education places you in a position to repay the student loans over time, so much the better.

You must make a decision (you're the only one who can):

1. Will your life be better or worse based on the decision you make now?

2. Are you now, or will you be, in a position to help him with his loan obligations after you marry? I make an assumption that you would be willing.

3. When will his income kick in after he completes his education? Remember, patience is a virtue.

4. Are you willing to wait to marry until he has acquired his student loans?

The student loan payments generally kick in 6 months after the completion of your education.

You might make a list of pros and cons for marrying now as opposed to waiting. The bottom line is what risk you are willing to take. By the way, he might just be making his own list also!
Connie K. Marmet:
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You can document arrangements you agree on in a prenuptial agreement. It's not romantic, but it documents in advance how you would handle your finances in different scenarios. Your situation is complex, so it would be wise to work with an accountant or financial planner to work out arrangements, as well as with an attorney to document [them] in an agreement.
Sharon P. Hardy, CFE:
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The only possible thing that readily comes to mind that would make prudent sense to do is to have a prenuptial agreement prepared and in force prior to the actual marriage ceremony. In the information that was imparted in this question, it certainly appears that both persons are looking for a reasonable solution to the issues that were posed.
Michael A. Masiello:
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You are to be commended. Yes, it's important to view finances as an issue prior to marriage. [With regard to] protection for income, the best option is disability and life insurance, and [those] should be acquired as soon as [you are] able. More than I can type on other protections, etc. for debt. Good luck.
Rebecca Schreiber CFP®:
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It is ultimately up to the court to determine if the loans are an individual asset or a marital asset. Generally both spouses need to benefit from the debt for it to be tagged to the family. To be on the safe side only borrow the amount charged by the school and not a penny more. If you borrow for living expenses you both incur (like rent or food), then the court can say you benefitted as well. If you only borrow tuition, the benefit is all his. Good luck!