Describe your Debt Load! - Boyfriend’s $60,000 student debt

Boyfriend’s $60,000 student debt

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Topic: Boyfriend’s $60,000 student debt

Posted By: vegan1975
Subject: Boyfriend’s $60,000 student debt
Date Posted: 06/June/2004 at 5:33am

My boyfriend and i plan to get married in the summer of 2005. By that point, he will have accumulated $60,000 in student debt (20k with the banks prior to 2000, and 40k with the NSLSC since then). In September 2005, he will be starting his PhD with full funding so he won't need student loans anymore, and will not have to repay them for the duration of his program (4 years). So, 2009 is when the interest would start accruing and payments be required.

In the meantime, I will be entering the job market after my MA in January 2005. I have no student debt and have good credit, but my MA is in Anthropology so i won't exactly be making the big bucks. However, we don't intend on having kids, buying a home (my parents own the condo in which we live so our rent is rather cheap), or making any big purchases over the next few years. Even our wedding will be ultra small and cost less than $1000. I fully intend to save as much as possible in the next four years to be able to pay off a huge chunk of his debt because the last thing i want to do is spend my money on interest.

So my questions...

Since he'll have this debt until at least 2009, we're not going to wait to get married. Is there some sort of pre-nuptual agreement that could stipulate that my credit would not be affected should he ("we") not be able to make his regular payments in 2009? Should i make periodic payments in the next four "interest-free" years to lower the principal or should i invest it in a GIC and pay a lump sum in 2009 to reduce the principal then? Any other advice? I'd welcome any input.

Julie

(my apologies for the length of this post)

Replies:

Posted By: kevmetric
Date Posted: 06/June/2004 at 9:59am

Anthropology?

You must be joking!

rotfl ! :-P

Posted By: find solution
Date Posted: 06/June/2004 at 9:04pm

Hi there,

I advise that you have a pre-nuptial agreement, in order to protect your credit rating and your future. I made the mistake of helping my partner and am still paying his debts because I gave him supplementary credit cards while I supported him through university, but he's gone. He is now "self-employed and declares minimum wage to avoid child support payments. You might have a great guy, but take care of yourself and be careful.

You stated that "the last thing i want to do is spend my money on interest".... don't pay for his loan!!!!! Wait until he graduates and starts paying it himself. In the meantime, invest in your retirement or buy property.

Posted By: vegan1975
Date Posted: 07/June/2004 at 8:50am

Thank you for your reply. The reason i intend to help pay off his loan is that it will benefit us both in the long term. I realize that there's always the possibility of a relationship ending for anyone, but i have to assume that in 10, 20 or 30 years we'll still be together - for this reason, it makes financial sense to get rid of the debt sooner. If i don't help him now, he'll still be paying off the principal and interest in 10 years and not be able to contribute to the household...same problem, just a decade later. I'd rather help him out now, give less to the banks, and just make sure i protect myself in the meantime.

Posted By: felixx
Date Posted: 15/June/2004 at 4:43pm

We're in an almost identical situation, and I was curious, vegan, if you've
found out whether a pre-nup will do what you want it to do. I've 60K+ in
debt, starting my PhD 09/05, not getting further loans, getting married
03/05, and I want my spouse and her family to be free of my debt
problems permanently. I had thought a pre-nup would do it, but haven't
had time to ask a lawyer about it. Any leads on that since you first
posted?

It never hurts to pay down your principal when there's no interest
accruing on it. That's one of the good things about student loans (if there
is anything good about them...now I wish I had been educated in
Germany...).

Posted By: vegan1975
Date Posted: 16/June/2004 at 7:54am

Hi Felixx,

The problem with prenuptial agreements, in my understanding, is that they only come into force upon death or divorce. I will want to protect myself in case my future-husband dies unexpectedly (or in the case of divorce i suppose, although few assume this will ever happen) so we'll most likely have one drafted.

As for protection during the marriage, i haven't come across anything yet regarding an individual's responsibility to (help) pay off a spouse's loan. However, it seems that upon consolidation of debts (and when figuring out the repayment schedule and possible interest relief), all the household income is taken into account - whether you like it or not. I suppose this is fair; I wouldn't want to see someone get interest relief while their spouse counted his or her millions in the bank.

I've come across many sites that discuss the risks of marrying into debt. The advice is usually to wait until the debt is repayed before getting married, or to find out as much as possible about your spouse's financial situation so that you know what you're marrying into. Neither option is of any help to me since we don't want to wait 10-15 years to get married, and i'm already knowledgeable about my partner's finances since i'm the one who does the banking for the both of us. I'm hoping there's an option 3 but I have yet to see mention of a simple contract that could be drawn up relieving the spouse of any responsibility during the marriage. I think sitting down with a lawyer to find out all available options will be the best option for all of us. That being said, if you find out anything on your end, please let me know.

Julie

Posted By: frustrated-guy
Date Posted: 24/June/2004 at 2:50pm

Hey Vegan,

you said

" and will not have to repay them for the duration of his program (4 years"

this may not be so.

I am a full-time Ph.D. student with past loans and the gov requires me to pay back my loans while I am a student. They only pay the interest on your loans for a limited number of weeks and if you do a Ph.D. you run out of weeks!

Sorry for the bad news

Posted By: frustrated-guy
Date Posted: 24/June/2004 at 2:52pm

Vegan

ps if you get married he will not qualify for interest relief

again, sorry for the bad news