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

Ben Luthi

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.


  • 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.


  • 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.


  • 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.


  • 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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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 11-21-2022. 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.

SoFi Rate Disclosure

3 SoFi Rate Disclosure:

Fixed rates range from 3.99% APR to 8.24% APR with a 0.25% autopay discount. Variable rates from 2.24% APR to 7.99% 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.

Earnest Rate Disclosure

2 Earnest Rate Disclosure:

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 4.24% APR to 9.24% APR (excludes 0.25% Auto Pay discount). Variable rates range from 3.49% APR to 8.24% 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.

ISL Rate Disclosure

5 Iowa Student Loan Rate Disclosure:

Fixed Rate Loan Terms: 5 years/60 monthly payments, 7 years/84 monthly payments, 10 years/120 monthly payments, 15 years/180 monthly payments, or 20 years/240 monthly payments. Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. This rate is expressed as an APR. Fixed APRs range from 3.94% to 8.48% APR [low to high range with 0.25% auto-debit rate reduction]. Rates are subject to change without notice. Fixed rates will not change during the term. Since there are no fees associated with this loan offer, the APR is the same percentage as the actual interest rate of the loan including a 0.25% auto-debit rate reduction. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. All estimates are based on information provided by you and are for informational purposes only, accuracy is not guaranteed and may not reflect actual rates or savings and do not constitute an offer of credit. Your actual rate, payment and savings may be different based on credit history, actual interest rate, loan amount, and term, including your cosigner [if applicable]. If applying with a cosigner, we use the higher credit score between the borrower and the cosigner for approval purposes. All loans are subject to credit approval.

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