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Spouse Student Loan Consolidation vs. Cosigning Your Spouse’s Refinance

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Before You Read, Lower Your Student Loan Payment

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Before You Read, Lower Your Student Payment

It’s that quick & easy — really. Our free tool checks a network of top refinance lenders and shows you options in one easy chart.

Checking rates takes 2 minutes with no impact on your credit
Federal & private loans are eligible
No maximum loan amount

If you’re married, combining your finances can simplify a lot of things — and in some cases, it can even help you save money.

When it comes to student loans, you have several options to getting the best deal. First, consider traditional student loan consolidation vs refinancing. If you are refinancing student loans, adding your spouse as cosigner could potentially get you a lower rate, but they would be equally responsible for the loan in the event that you cannot make a payment.

If you’re looking to consolidate student loans with your spouse, PenFed Credit Union offers this option by combining your income and debts and using the higher credit score between the two of you to determine your rates.

If you’re trying to decide the better option between consolidating student loans with your spouse and adding them to your refinance as a cosigner, here’s what you need to know.

What is spousal student loan consolidation?

A spouse student consolidation loan is only available from PenFed Credit Union. It allows you to combine your student loan balances and pay them off on one account instead of two.

PenFed’s Spouse Loan allows you to combine loans from both partners during the application process, something you can’t do in any other refinancing scenario.

The lender combines your income and debts to determine whether you’re eligible for the new loan, and the interest rate is based on the higher of your two credit scores and degrees.

Here are some pros and cons of spousal student loan consolidation.

Pros

  • Get better terms together: If one spouse has a significantly higher income and credit score, a Spouse Loan can help the couple take advantage of this difference and make it easy to get approved for a low interest rate.
  • Simplify your money situation: With a Spouse Loan, you only have one monthly payment to keep track of instead of multiple. This can be especially beneficial if both spouses have more than one loan servicer.

Cons

  • Potential issues if you divorce: PenFed’s Spouse Loan has repayment terms ranging from five to 15 years, which is a potentially long time to have shared debt. If you decide to divorce in the future, you may be required to split the debt equally, even if one partner had significantly more debt than the other in the beginning.
  • Both credit scores are at stake: Because you’re both on the new loan, missing a payment could damage both of your credit scores instead of just one spouse’s if you had kept the loans separate.
  • There’s no guarantee: Even if one spouse has a solid income and credit history, it’s not an assurance that you’ll be eligible for better loan terms than what you have with your existing lenders.

What is cosigning your spouse’s student loan refinance?

While spousal student loan consolidation involves combining student debts from two people into one account, cosigning your spouse’s student loan refinance leaves your student loans separate.

When you cosign for your spouse, you’re adding your name to their application and guaranteeing you’ll make payments if they can’t. As a result, that debt will show up on your credit report, and it will damage your credit if you or your spouse misses a payment.

As with spousal student loan consolidation, there are both benefits and drawbacks to cosigning a refinance loan.

Pros

  • Get better terms: As with a Spouse Loan, cosigning your spouse’s refinance loan can help them score a lower interest rate than they would be able to on their own. This is especially the case if they have bad or fair credit and little or no income.
  • It’s possible to release a cosigner: If the primary borrower improves their credit history and income situation over time, some lenders offer an opportunity to remove their cosigner from the loan. If eligible, a cosigner release program can be especially beneficial during divorce negotiations.

Cons

  • One spouse takes on more responsibility: While both partners are equally responsible for making payments on a Spouse Loan, a cosigning spouse is responsible not only for their own debt but also the debt of their partner — and that can be an especially tricky situation if you get divorced in the future.
  • Credit implications: If you miss a payment on the cosigned loan, it will affect both your credit scores. However, if the cosigning spouse misses a payment on their own loan, it’ll only impact their credit report.

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When to cosign a spouse’s refinance and when to consolidate together

While it’s not fun to talk about, divorce can complicate things, so if you have even an inkling that your marriage may be in trouble, it’s best to avoid both options as it can cause future financial problems.

If you feel like your marriage is safe, spousal student loan consolidation may be a good option if your debt balances and interest rates are relatively similar. If there’s a significant difference in either your balances or interest rates, you may benefit from working to pay off the loan with the higher interest rate or lower balance first to accelerate the debt payoff process.

It’s especially important to avoid a Spouse Loan if one spouse has a lower interest rate than what the new loan would provide. In that case, you may end up paying more in interest, and it may be better for that spouse to cosign their partner’s refinance loan to help them get a lower rate, too. You could also just exclude the lower-interest loans from the refinance, and only include the loans you will save on.

Regardless of which option you choose, it’s crucial to have a conversation with your spouse about both options to determine which one is right for you.

Talk about the advantages and disadvantages of both options, as well as your financial situation and goals, to help you make the best decision for your family.

Shop around to maximize your savings

No matter which path you’re considering, it’s crucial that you compare rates and other terms with several lenders before deciding.

It’s especially important to do this if you’re thinking about spousal student loan consolidation because a Spouse Loan is only available through PenFed Credit Union. This means that you don’t have any other lenders to compare to determine if you’re getting the best terms you qualify for.

By comparing the Spouse Loan with cosigning options with other lenders, you’ll have a better idea of what rates you can get with both options, which can help you make the right decision for your family. Use Purefy’s Compare Rates tool to simplify this process and view rate quotes from multiple lenders in one place — with no impact on your credit score.

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Ascent Rate Disclosure

Ascent’s undergraduate and graduate student loans are funded by Bank of Lake Mills or DR Bank, Member FDIC. Loan products may not be available in certain jurisdictions. Certain restrictions, limitations; and terms and conditions may apply. For Ascent Terms and Conditions please visit: www.AscentStudentLoans.com/Ts&Cs.

Rates are effective as of 12/1/2023 and reflect an automatic payment discount of either 0.25% (for credit-based loans) OR 1.00% (for undergraduate outcomes-based loans). Automatic Payment Discount is available if the borrower is enrolled in automatic payments from their personal checking account and the amount is successfully withdrawn from the authorized back account each month. For Ascent rates and repayment examples please visit: www.AscentStudentLoans.com/Rates.

1% Cash Back Graduation Reward subject to terms and conditions. Click here for details.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 4.49% APR to 8.99% APR with a 0.25% autopay discount. Variable rates from 5.09% APR to 8.99% APR with a 0.25% autopay discount. Unless required to be lower to comply with applicable law, Variable Interest rates on 5-, 7-, and 10-year terms are capped at 8.95% APR; 15- and 20-year terms are capped at 9.95% APR. Your actual rate will be within the range of rates listed above and will depend on the term you select, evaluation of your creditworthiness, income, presence of a co-signer and a variety of other factors. Lowest rates reserved for the most creditworthy borrowers. For the SoFi variable-rate product, the variable interest rate for a given month is derived by adding a margin to the 30-day average SOFR index, published two business days preceding such calendar month, rounded up to the nearest one hundredth of one percent (0.01% or 0.0001). APRs for variable-rate loans may increase after origination if the SOFR index increases. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. This benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. The benefit lowers your interest rate but does not change the amount of your monthly payment. This benefit is suspended during periods of deferment and forbearance. Autopay is not required to receive a loan from SoFi.

ISL Rate Disclosure

Earnest Rate Disclosure

2 Earnest Rate Disclosure:


Actual rate and available repayment terms will vary based on your income. Fixed rates range from 5.44% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.97% APR to 9.99% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. The maximum rate for your loan is 8.95% if your loan term is 10 years or less. For loan terms of more than 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95%. Please note, we are not able to offer variable rate loans in AK, IL, MN, NH, OH, TN, and TX. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

Earnest Rate Disclosure

Rates displayed include the 0.25% Auto Pay discount. You can take advantage of the Auto Pay interest rate reduction by setting up and maintaining active and automatic ACH withdrawal of your loan payment from a checking or savings account. The interest rate reduction for Auto Pay will be available only while your loan is enrolled in Auto Pay. Interest rate incentives for utilizing Auto Pay may not be combined with certain private student loan repayment programs that also offer an interest rate reduction. For multi-party loans, only one party may enroll in Auto Pay. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.67% APR to 16.15% APR (excludes 0.25% Auto Pay discount). Variable rates range from 5.64% APR to 16.45% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan origination loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

Nine-month grace period is not available for borrowers who choose our Principal and Interest Repayment plan while in school.

Earnest clients may skip one payment every 12 months. Your first request to skip a payment can be made once you’ve made at least 6 months of consecutive on-time payments, and your loan is in good standing. The interest accrued during the skipped month will result in an increase in your remaining minimum payment. The final payoff date on your loan will be extended by the length of the skipped payment periods. Please be aware that a skipped payment does count toward the forbearance limits. Please note that skipping a payment is not guaranteed and is at Earnest’s discretion. Your monthly payment and total loan cost may increase as a result of postponing your payment and extending your term.

Loan Eligibility criteria: Eligible students must: 1) For college Freshmen, Sophomores and Juniors, attend, or be enrolled to attend, a Title IV school full-time. For college Seniors and Graduate students, attend, or be enrolled to attend, a Title IV school at least half-time; and 2) be pursuing a Bachelor’s or Graduate degree. Earnest private student loans are subject to credit qualification, completion of a loan application, verification of application information, self-certification of loan amount, and school certification.

Responsible borrowing tip: Explore all scholarship, grant and federal options before applying for a private loan.

Earnest Private Student Loans are made by One American Bank, Member FDIC. One American Bank, 515 S. Minnesota Ave, Sioux Falls, SD 57104.

Earnest loans are serviced by Earnest Operations LLC, 535 Mission St., Suite 1663 San Francisco, CA 94105, NMLS #1204917, with support From Navient Solutions, LLC (NMLS #212430). One American Bank and Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by agencies of the United States of America.

Advertiser Disclosure:

THIS IS AN ADVERTISEMENT. YOU ARE NOT REQUIRED TO MAKE ANY PAYMENT OR TAKE ANY OTHER ACTION IN RESPONSE TO THIS OFFER.

ELFI Rate Disclosure

4 ELFI Rate Disclosure:

Education Loan Finance is a nationwide student loan debt consolidation and refinance program offered by Tennessee based SouthEast Bank. ELFI is designed to assist borrowers through consolidating and refinancing loans into one single loan that effectively lowers your cost of education debt and/or makes repayment very simple. Subject to credit approval. See Terms & Conditions. Interest rates current as of 10/13/2023. The interest rate and monthly payment for a variable rate loan may increase after closing, but will never exceed 9.95% APR. Interest rates may be different from the rates shown above and will be based on the term of your loan, your financial history, and other factors, including your cosigner’s (if any) financial history. For example, a 10-year loan with a fixed rate of 6% would have 120 payments of $11.00 per $1,000 borrowed. Rates are subject to change.

ELFI Rate Disclosure

Education Loan Finance is a nationwide student loan provider offered by Tennessee based SouthEast Bank. ELFI is designed to assist students financially with receiving their education. Subject to credit approval. See Terms & Conditions. Interest rates current as of 12/11/2023. Variable interest rates may increase after closing but will never exceed 18.00%. Interest rates may also differ from the rates shown above. The term of your loan, financial history, and other factors, including your cosigner’s (if any) financial history can affect the interest rate. For example, a 10-year loan with a fixed rate of 7% would have 120 payments of $11.61 per $1,000 borrowed. Rates are subject to change.

College Ave Rate Disclosure

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
Rates shown include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. If a payment is returned, you will lose this benefit. Variable rates may increase after consummation.
Minimum loan amount $1,000, as certified by your school and less any other financial aid you might receive.
This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
Information advertised valid as of 1/1/2024. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

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