resident/attending couple with dual student loans

[legoman]

First time poster here. I will be getting married later this year and we are trying to decide how best to approach our student loans. I am a PGY-3 in a 5 year residency (am planning on doing a 1 year fellowship after) and my fiancé is also a resident but will be starting as an attending this July just before we get married. Between us, we have about $485K in federal student loans ($234K for me, $251K for my fiancé), with the majority of all of these at 6.55% on an IBR payment plan.

We’ve roughly estimated that our combined household income for 2017 will end up being around $175K (pre-tax) and for the years after that while I am still a resident that it will be around $230K (pre-tax).

First, wondering if it is best if we file married filing jointly vs married filing separately. I realize if we do jointly there are tax benefits, but then would that also mean that both of us would be required to make “attending size” monthly payments towards our student loans since we would have a sizeable household gross income? If we did married filing separately, then would only my fiancé be required to make to the sizeable monthly payments on her loans as she would be the one generating income? How much does the federal loan service factor in if two people in your household have significant loans and would this decrease our required monthly payments.

Next, we were thinking it would be wise to reconsolidate at least her loans. If we did this, how would it factor into the above scenario? Would we then be making a large payment to the consolidated loan company and also then a large payment to the federal loan service for my loans which now, in the government’s eyes, are the only loans we have? What if we both reconsolidated our loans when she became an attending? Are there any loan reconsolidation companies out there that would let me make smaller monthly payments on my loans while I am still in residency/fellowship? Should we reconsolidate all our loans together into one lump sum principal or use separate companies for each of our loans?

I will say, we are trying to get rid of these loans asap. I am just trying to figure out if the best course of action is to put my loans on the backburner making the smallest required payments possible while we try to eliminate her loans first and then later can knock my loans out fairly quickly once we are both earning attending salaries.

Thanks in advance for any advice.

[FutureDoc]

If you guys are interested in knocking the loans out as fast as possible then refinancing hers and aggressively paying them down while you finish training is probably the best idea.  That should definitely be doable on an attending salary over the next three years.

For your loans there's some more balancing.  Have you been paying in IBR for all of residency?  If so then by the time you are done with fellowship you will only have four years of payments until forgiveness.  You could probably have your wife's loans paid off or close by the time your full loan payments start.

If you aren't interested in an employed position after fellowship and are sure you want to go into private practice, then you could try to have your loans refinanced as well, with DRB or common bond for the low monthly payments during training (I would make sure that the repayment isn't going to start until at the end of fellowship though, otherwise that could be a rude surprise).

 

If you know what both of your career plans are, and if you want to pursue PSLF, then you can get a better answer.

[hightower]

I agree with futuredoc.  Plus, it should be pretty easy for you guys to keep living like residents since you'll still be a resident.  No reason to upgrade your lifestyles.  Just pay yourselves enough money to live on each month (and maybe a little extra for a vacation or two) and take the rest of what she's making and throw it at her loans.  Since they are all the same interest rate just start hitting the smallest balances first so you'll start seeing some "Paid in Full" notices in your inbox relatively quickly.  It will feel good.  And by time you are done with training, hers will be gone and you guys can upgrade your lives a little.

But also try to max out your 401ks and roth's each year as well.  That will save you on taxes.

Also, if she has the opportunity to pick up extra work for extra money, she should take advantage of that now while you're still in training.  Unless of course you have kids and she needs to be home more.

Not sure about the filing jointly vs separately issue.  But, tax reform is likely coming from the current administration, so things are probably going to work out in your favor either way considering the way that republicans typically reform taxes.

[Anesthesia84]

My husband and I have been in this situation for the last 2.5 years. I finished residency in 2014 and started making an attending salary while he has been in fellowship (finishes this June). We approached it by paying down both sets of loans equally (ie, we both pay $3500/month toward our loans, so $7k/month toward student loans total). Yes, this pretty much comes from my salary since his is only 60k and after taxes it doesn't even cover our childcare expenses  

We have been married for almost 10 years though and our finances are completely combined. Our loan totals were basically equal (close to 300k each at their highest points). We think of all assets and debts as "ours" though we DID NOT refinance our loans together or cosign them since they would die with either one of us. We are paying them down equally for the same reason - if one of us dies or becomes disabled then it would be about the same amount of loans that the other is left with. We also have similar earning potential (anesthesia/ cardiology) although I have chosen a job where I only work 4 days per week without any call so am currently taking a paycut so I can spend more time with our kids.

Good luck!

[legoman]

Thanks all for the advice. I have been paying on IBR since starting residency. I have thought and read a lot about the PSLF situation. My finace has signed with a private practice, so that puts her out of commission for PSLF. At this point, I am not entirely sure if I will go with hospital employed vs private practice, although currently I am leaning more towards private practice. We also do not want to have these loans hanging over our heads for another four years after I finish fellowship by going the PSLF route, we just want them to be gone so we can move on with our lives.

I suppose the other factor to consider would be once I am an attending, we will have a two-attending household income which would spike up our monthly payments required for those last 4 years if we didn't refinance and went for PSLF, which might offset any loan forgiveness we could potentially get. I feel like the combination of these factors, along with the potential uncertainty (depending on who you ask) that the program will last is pushing me towards likely refinancing my loans in residency or soon after I become an attending. I did some research on the low payments during residency for refinancing and it looked like that is offered by DRB and Link Capital (couldn't find any immediate info that CommonBond offered this, at least on their website).