For some people in relationships, making a long-term commitment to your partner may mean doing anything for them — even if it’s helping to pay off their debt.
Foster City, Calif., couple Katie Austin and Ryan Grant came to this crossroads just seven months into their relationship. At the time, Austin, a 30-year-old marketing manager, had paid off a little more than half of her $50,000 student loan debt from college and graduate school. She was making progress, but the high interest rates on her loans made it difficult to pay off the debt as quickly as she wanted.
“I figured out that I could pay off my entire loan within a year if I just didn't have to pay interest,” Austin explains. Grant, 33, offered a generous solution: he would give Austin the $22,000 she needed to pay off the remaining balance on her loans and allow her to pay him back, interest-free. Grant, who works as a videogame designer, says it wasn’t a difficult decision. With no student debt of his own and eight years’ worth of savings in the bank, he felt comfortable backing the loan.
“I had enough saved to pay off her debt, so it was only logical to lend her the money so that, as a team, we would save thousands of dollars in interest,” Grant says. “It felt like a way to do something really good that I knew would have a large impact on her and our financial futures.”
To Austin, it was a sign that Grant was committed to their relationship for the long term. “We definitely did it as a way to plan for a future together,” she says.
If anything, taking a loan from her boyfriend put even more pressure on Austin to pay the debt off as quickly as possible. She tracked each payment carefully. Within a year, she had repaid the entire debt.
“I can't tell you how excited I got to cut him a check every month,” Austin says. “Sometimes, I would write it a week early just because I got so excited to check that month off on my tracker.”
What to Consider Before Paying Off a Partner’s Debt
Things worked out wonderfully for Austin and Grant, but agreeing to take on a spouse’s or significant other’s debt can easily get messy quickly, financial experts warn.
Before you agree to pay off a debt that does not belong to you, it’s helpful to understand where the debt came from. “I would want to understand the root cause of the debt,” says Jason Preti, a certified financial planner based in Kirkland, Wash.
Debt caused by overspending, short-term unemployment, gambling problems, or student loans all require a different approach, because the reason why the person holds that debt varies.
If the debt comes from a spending or gambling problem, simply paying it off will not address the root problem. On the other hand, if someone took on debt because of an unexpected, one-time emergency (like an injury or home repair) or the debt comes from student loans, there’s less likely to be a chronic spending problem to deal with.
New York City-based CFP Cristina Guglielmetti says the key is a willingness by both partners to address the underlying issues head on as a team. If one partner is unwilling to make that effort, “I would recommend against paying off the debt,” she says. “I can show them how I would pay off the amounts and illustrate scenarios on the long-term effects of different payback strategies, but there needs to be buy-in from both parties to make that work.”
Over the course of a relationship, especially for couples who decide to marry, live together, or merge their financial lives in a significant way, it may make sense to tackle debt as a team.
“That means you look at all your resources, prioritize the debt that needs to be paid down first, and use those resources to pay down the debt,” Guglielmetti explains. “Sometimes that could mean one person's student loan debt, but other times that could mean paying down the other person's high-interest credit cards to improve their credit score so you can buy a home in a few years.”
Hinesville, Ga., couple Krystal Hart, 30, and Andra Hart, 30, decided to pool everything together — both their incomes and their debts — when they were married in 2012. In total, they had about $15,000 worth of debt. They decided to divide and conquer using the infamous snowball method. They focused on Andra’s debts, which were smallest, first. Krystal’s income went toward those debts, while Andra’s income went toward the couple’s household expenses and bills. They repaid his debts in 2016, and Krystal says she anticipates repaying her credit card and student loan debt by 2019.
“We have enjoyed celebrating every time something is paid off and love tracking how much further we have before we can be debt free,” Krystal says. Combining everything and writing out a shared budget keeps them focused and accountable.
“Every couple views money differently,” she says. “You have to decide how you’ll handle your finances with your partner.”
What If You Don’t Want to Pay Off Your Partner’s Debt?
There’s nothing wrong with not wanting to help a partner pay off their debt, especially if you are not yet married or committed to a long-term relationship.
“Taking on someone's debt can lead to a lot of resentment if the relationship doesn't work out and there is no real recourse for you recouping the money or taking it back if you've already paid off the debt,” says Pam Capalad, a New York City-based CFP.
In some cases, you may not have a choice in whether or not you are on the hook for your partner’s debts. In states like Texas and Wisconsin, which have community property or common-law rules, spouses may share responsibility for debt incurred by their partners before or during marriage, explains Guglielmetti.
If you are concerned about assuming liability for your spouse’s debt, one way to protect yourself is to draw up a prenuptial or postnuptial agreement with your spouse.
“If you're not seeing eye-to-eye with your prospective spouse about how to handle money, but you still want to go ahead with the marriage, consider a well-drafted prenup or postnup spelling out what exactly is yours, mine, and ours,” Guglielmetti says.
Austin and Grant drew up their own unofficial agreement when Grant paid off Austin’s student debt. The agreement functioned like a contract, listing out when each payment would be due and what would happen if Austin was unable to pay back the loan.
The Consequences of Paying Off a Partner’s Debt
Austin and Grant show that it’s possible to provide a happy ending to the story of paying off a partner’s debt. But there are no guarantees, and it’s important to understand the potential pitfalls and carefully think through every aspect of helping someone else with their loans — no matter how much you love or care about them.
The downsides of helping out your significant other by repaying their debts for them may seem obvious, but they’re important to recognize:
- You use your own money to better someone else’s financial situation, which means less cash on hand to save or invest for your needs and goals.
- You could even lose money, if that person promises to pay you back but fails to do so.
- Helping out a spouse or partner can create tension and resentment, even in the person who supposedly benefits by receiving financial help. There’s a lot of emotion and feeling tied up in money, and it can be difficult to act and think completely rationally.
- If you pay off someone else’s debt for them, they can feel like they owe you for the favor. You might find you feel this way too, after you provide the funds.
The Bottom Line
Money impacts relationships, and it’s important to understand how you both look at finances before you leap to anyone’s rescue — even when you mean well.
Make sure you can each talk openly about money and your financial situations. If there’s resistance from either of you when it comes to having a conversation, it’s a good sign that taking further action that requires more commitment — like paying off someone’s debt or lending them money to erase balances — might not be the best move.
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.