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Best PSLF plan for soon to be married couple

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  • Best PSLF plan for soon to be married couple

    I am going to be getting married before the end of year. My partner has a salary that is around 80K and mine is around the 200K. I am currently on the CARES forbearance and have about 16 more months of payments to make. Any suggestions for the best plan to enter into when we go back to making payments. Looking at the provided calculator by it looks like ICR will have much lower payments. REPAYE may be another option (am currently in that), but given that will be married by the end of this year want to see what ya'll thought is best approach in terms of filing status, which plan, etc. I do intend to pursue forgiveness.

  • #2
    This is a complicated topic and I don't have an answer but there are several blog posts that you should find to be helpful:


    • #3
      I gotta be honest - I don't even know what the terms of the ICR payment plan is, which makes me suspicious on that being best for you. We don't have enough details to give you an exact answer, but unless you have some highly unusual situation, I doubt ICR would be the best. Unless something changed and I need to learn a new option.

      Since everything is always a year behind and you are only 16 payments out, part of me would think the path of least resistance (staying on REPAYE) would probably be the best. presumably, you wouldn't need to recertify for another few months (6? 12? who knows) and then you just have a few more to pay after that. So stick with it.

      Otherwise, are you sure you'll even be able to change plans? Imagine you were starting from scratch - if you had 280k in income and only 25k in student loans, let's say, you don't qualify for an IDR anyways, so you may need to stay in REPAYE regardless.


      • #4
        Why enroll in ICR? You should be eligible for IBR or PAYE. Assuming you're going for loan forgiveness.

        Enroll in PAYE. If you can't enroll in PAYE enroll in IBR.

        If you file taxes married filing separately you can keep your SL payments lower than if you file jointly.

        I wrote about this extensively in this post.
        Helping student loan borrowers manage their student loans. [email protected]


        • #5
          Yes, there is a financial hardship required with IBR and PAYE. If you can't get into PAYE or IBR go with REPAYE instead of ICR.

          Others like Joanna can correct me on liquidation of investments, but I don't believe it is factored into your taxable income since the liquidation is subject to capital gains tax which can be less than what you pay on income taxes.

          I'm not sure how it would look if you filed taxes jointly(MFJ) or separately(MFS). If you file separately you lose out on a # of deductions and generally pay more in taxes. But it may end up being better to pay more in taxes through MFS as you could end up saving more from reduced student loan payments.
          Helping student loan borrowers manage their student loans. [email protected]


          • #6
            Originally posted by histiocyte
            Great post. Appreciate everyone’s help.

            Andrew, I thought financial hardship was require for IBR or PAYE.

            is liquidation of taxable accounts factored into the disposable income? We are doing that to help pay for a house this year.

            also her income is lower than mine and family size would go up so would that even potentially help to do MFJ especially with higher dedications and tax brackets etc.?
            Liquidation of taxable accounts by themselves aren't a factor - but if you have gains that become realized (and thus taxable) in that liquidation, that absolutely gets taken into account. Everything starts with AGI - so anything that makes that go up will increase the amount of "disposable income" you have.

            There is no way we can answer the second question without a bunch more info - you should run your own calculations in to see what your taxes would look like and proceed from there on the loan simulator.


            • #7
              you have 16 mo of payments until you get PSLF?

              if so it doesn't matter what you do.


              • #8
                Originally posted by histiocyte
                One other piece of the story is that we are getting married around the new year, but the legal marriage (which we view as secondary to the actual marriage to take place between us) may happen slightly before or after the new year.

                If it happens before the new year, we would have some tax deductions and some increased limits for 2021. If it happens in 2022, I would end up paying substantially less once I get my payments recertified (on the order of 1.5K per month) in May based on my 2021 (single) tax return. However, since we will be legally married no matter what by the time I recertify in May 2022, does it not even matter, and we might as well do the legal part in 2021, i.e., when I fill out the app in March or April 2022, even if I filed single taxes 2021, it would take our whole household income into account. These details are a bit shrouded in mystery on the federal loans website.
                Since the next time you recertify in May it's going to look at your tax return for 2021, as long as you didn't marry in this year (2021) you should be fine. And if you want to keep your payments lower, just look to file taxes married filing separately if you're in PAYE or IBR.
                Helping student loan borrowers manage their student loans. [email protected]


                • #9
                  Yes, things are certainly starting to change with the news from this morning. Guess it wouldn't be a bad option if qualifies.

                  The reason I wouldn't be in the standard 10 year payment plan though was if you didn't go over the payment cap in REPAYE or had a high earning spouse and wanted to exclude their income by MFS in IBR/PAYE.
                  Helping student loan borrowers manage their student loans. [email protected]