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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Your marriage status can affect your financial life in unexpected ways, and student loans are no exception. If you have an income-driven repayment plan, your spouse’s income might change your monthly payment calculation. But such challenges also present opportunities. For instance, you may be able to rejigger your student loan payments to save money on interest, lower your monthly payment, or shorten your repayment term so you can become debt-free faster.

Here we’ll show you how getting married affects student loans. Learn strategies for restructuring your debts, and tips for saving money that you can put toward other goals.

Marriage and Student Loan Repayments

Your marital status can affect everything from loan payments to tax breaks. Understanding how marriage impacts student loans (yours or your partner’s) can help you craft a new repayment plan and get ahead of your other financial goals. That way, you can focus on more urgent matters, like who’s making dinner tonight.

How Marriage and Student Loans Can Affect Your Taxes

If you paid student loan interest in the previous tax year, you may qualify for a student loan deduction. But your eligibility can change depending on if you are filing jointly or separately.

According to the IRS, as of the 2021 tax year, a single person (or head of household) with a modified adjusted gross income (MAGI) under $85,000 may be able to deduct up to $2,500 of qualified student loan interest paid in a given year. (Eligible MAGI for married filing jointly for this deduction is under $170,000.)

However, if you’re married but filing separately, that student loan interest deduction goes away. You can only take advantage if you file jointly. (See below for other deductions you may not qualify for if filing separately.)

Helping Each Other with Repayments

If you want to help your spouse with their student loan repayment, whether they have private or federal loans, you can. When one spouse takes out a loan before the marriage, typically that loan still belongs to the original borrower. However, you can choose to put both your names on the loan, and be equally responsible for the debt, by refinancing together.

Refinancing student loans gets you a brand-new loan in both your names. At the same time, you may be able to qualify for a lower interest rate or better terms. However, you will forfeit your federal student loan benefits if you refinance federal loans with a private lender.

Marriage Could Complicate Your Income-Driven Repayment Plan

When you’re married and filing separately (vs. jointly), student loan servicers count only your individual income. But if you file jointly and you or your spouse is enrolled in the Revised Pay As You Earn (REPAYE) plan — one of four income-driven repayment plans — you could see your monthly payments increase. When filing your taxes jointly, your combined AGI replaces your individual income in REPAYE’s calculations.

For the three other income-driven repayment plans — Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) — you can potentially avoid higher payments by filing separately. However, when you do this you lose the ability to use the student loan interest deduction.

Filing separately also means you’ll no longer be able to qualify for the Earned Income Tax Credit, the American Opportunity Credit, and Lifetime Learning Credit. There is no one blanket answer for every married couple. Given the complexity of tax law, you’ll want to consult a tax professional to determine which option is best for you both.

Tips for Tackling Student Loan Debt Together

So what’s the best strategy for paying down student loans without letting them come between you and your spouse? Here are five tips to a debt-free happily ever after.

Tip #1: Create Your Big Financial Picture

Preparing to take on a big financial goal usually requires some conversation and preparation upfront. Before making any decisions, sit down and talk about your short- and long-term financial objectives, and make sure you’re both on the same page (or as close to it as possible). This can be an overwhelming topic, so see if you can break it down into chunks.

Have you established a household budget? How do student loans — and paying them off — fit into your long-term and short-term goals? Should you start aggressively paying off debt, or might it be better for you to ramp up over time? What other factors (e.g., buying a home, changing careers, having children) might influence your decisions?

Not only can this exercise give you more clarity to create an action plan, it can also be kind of fun. After all, planning a life together is part of the reason you got married in the first place. The key is to listen to each other.

Tip #2: Take Advantage of Technology

Once you’re clear on the big picture, it’s time to get into the weeds. Many people have more than one student loan, often with multiple lenders, so a good place to start is to gather all of your loan information together. You can use an online student loan management tool (try https://studentaid.gov/loan-simulator/) to compare repayment options and analyze prepayment strategies.

After crunching the numbers, your debt payoff strategy may include putting extra money toward your loans each month, which means creating and sticking to a budget that supports that goal.

Using a debt payoff planner can help you keep track of your debt payments, maintain spending within a budget, and show how close you are to paying off your debt in full. Tracking your spending may not feel good at first, but over time, this kind of discipline can help you see where your money goes and make conscious choices about your spending. Once you have your budget in place, these apps can be set up to alert you both when spending is getting off track.

Tip #3: Define the Who, What, When

Whether your finances are separate or combined, you’ll probably want to come to an agreement on how to collectively pay all of your financial obligations. Many couples address this based on each person’s share of the total household income.

For example, if one person contributes 40% of the household income, and the other 60%, the former might pay 40% of the shared bills and the latter 60%. Others find it simpler and more cohesive to have one household checking account and pay all bills from there. Or you can combine the two tactics, and have each spouse contribute a prorated amount to the joint bank account.

However you decide to split things up, consider setting up automatic payments for all household bills, because missed student loan payments can potentially impact both spouses’ credit. And a weak credit rating can make your future financial objectives tougher to achieve.

Tip #4: Look For Opportunities to Optimize

So now you’ve established a plan and a budget, and you know who’s on point for each bill. You’re on the path to getting student loan debt off your plate. Is there anything else you can do to speed up the process?

Short of winning the lottery, the most common ways to accelerate student loan payoff are prepayment (meaning, paying more than the minimum) or lowering the interest rate, the latter of which is most commonly accomplished through refinancing.

If you qualify to refinance your student loans, you’ll have to decide on your primary goal:

•   Lower your monthly payment by choosing a longer term. This frees up money in your budget, but you’ll potentially pay more in interest over the long term.

•   Lower your interest rate. This saves you money in interest over the long term. (It can also lower your monthly payment, but don’t count on it.)

•   Shorten the repayment period. This can save you money on interest over the life of the loan, and get you debt-free faster.

Tip #5: Be on the Same Team

Living with debt is stressful for any couple. But being in a committed relationship has its advantages. There’s a reason that weight loss experts often recommend finding a “buddy” to help cheer you on and keep you honest on your diet and exercise journey. The same applies to achieving a big financial goal like paying off student loan debt.

Keep it positive and the lines of communication open, and you may find that the journey to being debt-free makes your marriage stronger.

Refinancing Student Loans Separately vs. Jointly

If you and your new spouse decide you want to do more things with your money — have a child, buy a home, or invest more in retirement savings — it may be time to refinance student loans. Once again, you’ll need to run some numbers and decide whether to refinance your student loans together or separately.

When you apply to refinance your student loans, lenders typically evaluate your credit score and financial fitness. This determines your new interest rate and loan terms. The goal is for the new loan to be a better deal than your existing loans.

With a lower interest rate, you can reduce the amount of money you spend over the life of the loan. And with only one monthly student loan payment to worry about, your finances can be easier to manage.

But are you better off going it alone or together?

Refinancing Student Loans Separately

When you’re married, refinancing your student loans separately has pros and cons.

Even if you’re married, refinancing student loans separately may be right for you if any of the following statements are true:

•   Your credit score and history are much stronger than your spouse’s, and you want to qualify for the lowest interest rate possible.

•   You and your spouse have different goals for refinancing — for instance, a lower monthly payment vs. saving money in interest.

•   Your spouse hopes to qualify for Public Service Loan Forgiveness (PSLF).

•   Your spouse is enrolled in an income-based repayment plan or is taking advantage of other federal repayment protections.

•   One of you has a much higher student loan balance, while the other has almost paid off their loans.

Refinancing Student Loans Jointly

On the other hand, there are compelling arguments for being married and refinancing student loans jointly.

Refinancing student loans jointly may be right for you given one of these scenarios:

•   Your credit score and history are much weaker than your spouse’s, and you can’t afford the interest rate and loan terms you qualify for alone.

•   You’re a stay-at-home parent with no earned income, making it difficult to qualify separately.

•   It’s important to both of you to be on the same team financially.

Refinance Student Loans With SoFi

For some couples, a lower interest rate can mean more flexibility and a more manageable repayment plan. After all, the average graduate holds 8-12 student loans. That gives married couples 16-24 different loan payments to make each month. Refinancing together can transform a student loan mess into a single, affordable payment.

To see how refinancing might impact your student loans and your partner’s, take a look at SoFi’s student loan refinance calculator. With SoFi, there are no application or origination fees, and no prepayment penalties.

FAQ

Does getting married affect student loan payments for you and your spouse?

If you or your spouse is enrolled in an income-driven repayment plan, you may see your payments increase after marriage. You can potentially avoid higher payments by filing your taxes separately. However, you’ll forfeit the ability to use the student loan interest deduction.

Is my spouse responsible for my student loans?

Loans taken out before the marriage still belong to the original borrower. Your spouse is not responsible for them unless they cosigned the loans with you. You can choose to put both your names on your loans, and be equally responsible for the debt, by refinancing together.

Does marriage affect financial aid?

Marriage typically has a positive effect on qualifying for financial aid. If you are under 24 and married, your parents’ income will no longer be considered in financial aid calculations, but your spouse’s will — this usually means your household income drops. However, if your spouse has significant income or assets, that can negatively affect your eligibility for financial aid.

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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

A bull put spread is an options trading strategy that someone may use when they have a moderately bullish view of an asset, meaning they think the price will increase slightly. The strategy allows you to profit from an increase in an underlying asset’s price while limiting losses if an asset’s price declines.

Bull put spreads and options trading are not for everyone, but learning the ins and outs of this strategy may help your financial portfolio.

What Is a Bull Put Spread?

A bull put spread is an options trading strategy that involves buying a put option and selling another put option on the same underlying asset with the same expiration date, but at different strike prices. The trade is considered a neutral-to-bullish strategy, since it’s designed so the maximum benefit occurs when an asset’s price moderately increases.

To execute a bull put spread, a trader will simultaneously sell a put option at a specific strike price (the short leg of the trade) and buy a put option with a lower strike price (the long leg of the trade).

The trader receives a premium for selling the option with a higher strike price but pays a premium for buying the put option with a lower strike price. The premium paid for the long leg put option will always be less than the short leg since the lower strike put is further out of the money. The difference between the premium received and the premium paid is the maximum potential profit in the trade.

The goal of the bull put spread strategy is to finish the trade with the premium earned by selling the put (sometimes referred to as writing a put option) and lose no more than the premium paid for the long put.

A bull put spread options trading strategy is sometimes called a short put spread or a credit put spread.

💡 Recommended: Options Trading 101: An Introduction to Stock Options

How a Bull Put Spread Works

Bull put spreads focus on put options, which are options contracts that give the buyer the right – but not always the obligation – to sell a security at a given price (the strike price) during a set period of time.

The bull put spread strategy earns the highest profit in situations where the underlying stock trades at or above the strike price of the short put option – the put option sold with the higher strike price – upon expiration. This strategy, therefore, works best for assets that the traders of a bull put spread believe will trade slightly upwards.

The strategy provides a way to profit from a stock’s rising price without having to hold shares. An options strategy like this also caps downside risk because the maximum loss is the difference between the strike prices of the two puts minus the net premium received.

Even though the risk is limited, there can still be times when it makes sense to close out the trade.

💡 Recommended: How to Trade Options: An In-Depth Guide for Beginners

Max Profit and Risk

A bull put spread is meant to profit from a rising stock price, time decay, or both. This strategy caps both potential profit and loss, meaning its risk is limited.

The profit of a bull put spread is capped at the premium you receive by selling the short leg of the trade, minus the premium you spent to buy the long leg put option. You achieve this maximum profit if the underlying asset finishes at any price above the strike price of the short leg of the trade.

Maximum profit = premium received for selling put option – premium paid for buying put option

The maximum losses (i.e., the risk) of a bull put spread is the difference between the strike price of the short put option and the strike price of the long put option, minus the net premium you received.

Maximum loss = strike price of short put – strike price of long put – net premium received

The breakeven point of a bull put spread is the price the underlying asset trades at expiration so that the trader will come away even. The breakeven point will equal the difference between the net premiums you receive up front and the strike price of the short put option. At the breakeven, the trader neither makes nor loses money, not including commissions and fees.

Breakeven point = strike price of short put – net premium received

Bull Put Spread Example

Alice would like to use a bull put spread for XYZ stock since she thinks the price will slowly go up a month from now. XYZ is trading at $150 per share. Alice sells a put option for a premium of $3 with a strike price of $150. At the same time, she buys a put option with a premium of $1 and a strike price is $140. Both put options have the same expiration date in a month.

Alice will collect the difference between the two premiums, which is $2 ($3 – $1). Since each option contract is usually for 100 shares of stock, she’d collect a $200 premium when opening the bull put spread.

Maximum Profit

As long as XYZ stock trades at or above $150 at expiration, both puts will expire worthless, and she will keep the $200 premium she received at the start of the trade, minus commissions and fees.

Maximum profit = $3 – $1 = $2 x 100 shares = $200

Maximum Loss

Alice will experience the maximum loss if XYZ stock trades below $140 at expiration, the strike price of the long leg of the trade. In this scenario, Alice will lose $800, plus commissions and fees.

Maximum loss = $150 – $140 – ($3 – $1) = $8 x 100 shares = $800

Breakeven

If XYZ stock trades at $148 at expiration, Alice will lose $200 from the short leg of the trade with the $150 stock price. However, this will be balanced out by the initial $200 premium she received when opening the positioning. She neither makes nor loses money in this scenario, not including commissions and fees.

Breakeven point = $150 – ($3 – $1) = $148

Bull Put Spread Exit Strategy

Often, trades don’t go as planned. If they did, trading would be easy, and everyone would succeed. What sets successful traders apart from the rest of the pack is the ability to make winning trades, mitigate risk, and limit losses.

Having an exit strategy can help by providing a plan to cut losses at a predetermined point, rather than being caught off guard or simply “waiting” and “hoping” that the market turns around in your favor.

An exit strategy may be a little complicated for a bull put spread. Before the expiration date, you may want to exit the trade so you don’t have to buy an asset you may be obligated to purchase because you sold a put option. You may also decide to exit the position if the underlying asset price is falling and you want to limit your losses rather than take the maximum loss.

To close out a bull put spread entirely would require that the trader buy the short put contract to close and sell the long put option to close.

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Pros and Cons of Bull Put Spreads

The following are some of the advantages and disadvantages of bull put spreads:

Impacts of Variables

Several variables impact options prices, and options trading terminology describes how these variables might change in a given position.

Because a bull put spread consists of a short put and a long put, the way specific changes in different variables impact the position can be different than other options positions. Here’s a brief summary.

1. Stock Price Change

A bull put spread does well when the underlying security price rises, making it a bullish strategy. When the price falls, the spread performs poorly. This is known as a position with a “net positive delta.” Delta is an options measurement that refers to how much the price of an option will change as the underlying security price changes. The ratio of a stock’s price change to an option’s price change is not usually one-to-one.

Because a bull put spread is made up of one long put and one short put, the delta often won’t change much as the stock price changes if the time to expiration hasn’t changed. This is known as a “near-zero gamma” trade. Gamma is an estimation of how much the delta of a position will change as the underlying stock price changes.

2. Changes in Volatility

Volatility refers to how much the price of a stock might fluctuate in percentage terms. Implied volatility (IV) is a variable in options prices. Higher volatility usually means higher options prices, assuming other factors stay the same. But a bull put spread changes very little when volatility changes, and everything else remains equal.

This is known as a “near-zero vega” position. Vega measures how much an option price will change when volatility changes, but other factors are unmoved.

3. Time

Time decay refers to the fact that the value of an option declines as expiration draws near. The relationship of the stock price to the strike prices of the two put options will determine how time decay impacts the price of a bull put spread.

If the price of the underlying stock is near or above the strike price of the short put (the option with a higher strike price), then the price of the bull put spread declines (and makes money) as time goes on. This occurs because the short put is closest to being in the money and falls victim to time decay more rapidly than the long put.

But if the stock price is near or below the long put’s strike price (the option with a lower strike price), then the price of the bull spread will increase (and lose money) as time goes on. This occurs because the long put is closer to being in the money and will suffer the effects of time decay faster than the short put.

In cases where the underlying asset’s price is squarely in-between both strike prices, time decay barely affects the price of a bull put spread, as both the long and short puts will suffer time decay at more or less the same rate.

4. Early assignment

American-style options can be exercised at any time before expiration. Writers of a short options position can’t control when they might be required to fulfill the obligation of the contract. For this reason, the risk of early assignment (i.e., the risk of being required to buy the underlying asset per the option contract) must be considered when entering into short positions using options.

In a bull put spread, only the short put has early assignment risk. Early assignment of options usually has to do with dividends, and sometimes short puts can be assigned on the underlying stock’s ex-dividend date (the date someone has to start holding a stock if they want to receive the next dividend payment).

In the money puts with time value that doesn’t match the dividends of the underlying stock are likely to be assigned, as traders could earn more from the dividends they receive as a result of holding the shares than they would from the premium of the option.

For this reason, if the underlying stock price is below the short put’s strike price in a bull put spread, traders may want to contemplate the risk of early assignment. In cases where early assignment seems likely, using an exit strategy of some kind could be appropriate.

Start Investing Today With SoFi

Trading options isn’t easy and can involve significant risk. Many variables are involved in options trading, some of which have been notorious for catching newbie traders by surprise. While we’ve answered the fundamental question “what is a bull put spread” here, new investors looking to implement this strategy will still have a lot to learn.

For investors ready to dive into bull spreads and other options trading strategies, SoFi’s options trading platform is a good place to start, thanks to its intuitive design. Investors can trade options from the mobile app or web platform. Plus, they can check out educational resources about options if any questions arise.

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