In a nutshell : 70 year old wife with over 70,000 dollars in federal student loan debt. Original amount and a few thousand in interest has been paid back. Loans incurred years before meeting current husband. We live in a non community property state. If we file married filing separate she gets a yearly forbearance (interest continues to grow ) , they don't call everday and she will never have to pay for this debt Her income is social security . It costs us thousands of dollars to file this way as opposed to married filing jointly. Why would Navient want a copy of our joint return? It is my understanding that they cannot consider my income for paying this loan since we are in a non communityproperty state?
May 3, 2014
The state you are in should not have any impact on what Navient considers when determining your wife's monthly payment. (Based upon what you are describing it sounds like she is signed up for some sort of income driven repayment plan).
There seems to be some disconnect between you and Navient if they are asking for a copy of your joint return and you are saying that one does not exist.
You might want to look into either Income Based Repayment or Pay As You Earn. By filing separately, your wife's payment could be $0 per month based upon the fact that her only source of income is social security.
One potential item to be aware of is that there is a repayment plan called the Revised Pay As You Earn plan. This plan is unique in that even if you file separately, spousal income is still used in determining the monthly payments. You may want to make sure that this is not what you signed up for.
The Department of education repayment estimator should be a good tool for you and your wife to look at her different options. Once you have wrapped your mind around what is out there, maybe you will have more luck with Navient communicating what you need done. The repayment estimator can be found here: https://studentloans.gov/myDirectLoan/mobile/repayment/repaymentEstimator.action
Thanks for reply, but I wasn't clear enough. This loan will never be repaid. Wifes income is social security only and Navient will give her a yearly forbearance til the day she dies. They want our yearly irs 1040 so they can see my income and go after her accordingly. Since they cannot hold me libel for a debt incurred long before our marriage why do they need to see our tax return?
May 3, 2014
I could be mistaken on this, but I suspect the "yearly forbearance" that she gets is actually accomplished by signing her up for an income driven repayment plan. Based upon her income, the monthly payments could be $0 per month. These plans have to be rectified every year using the pervious years tax return. From your perspective, this might seem like a forbearance rather than a repayment plan.
Could this be what is happening?
Exactly. If we file separate her income is so low that they give her a year of zero owed. If I send in a joint account I fear that they will try and go after my income to pay back her loan incurred years before we met. As I read the law, they should not be able to do this based on being a resident of a non community property state .
May 3, 2014
What repayment plan is she signed up for?
May 3, 2014
There are actually several different income driven repayment plans.
There is Income Based Repayment (IBR), Income Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE). The Federal Student Aid Website explains the different plans here: https://studentaid.ed.gov/sa/repay-loans/understand/plans
The reason I ask is that the specific income driven plan you are on is actually very important. Some plans, such as REPAYE, will need to see both tax returns no matter what. However, if she is signed up for IBR or PAYE, filing separately would mean that they don't look at your tax return for calculating her monthly payments.
It is IBR . They ask for her tax return each year. If we file separate they get her return and she pays nothing. Filing separately changes my social security monthly amount and increases our tax bill and we lose about 5 thousand dollars for 2016. If I send in a joint irs return , I think they will calculate her payment using my income. I believe they can not legally do that because her loans were done years before we met and we live in a non community property state.
May 3, 2014
You are right about how they calculate the IBR payments. File separately, they just look at her income. File jointly, and they will use your income when determining how much she has to pay each month. And yes, filing separately can be very expensive because it means higher taxes.
As for your argument about the loans pre-dating your marriage, it is definitely a new one that I have not heard before. In my years of dealing with student loans, I've never heard someone make the argument that repayment should be treated differently in community property states vs. non community property states.
My initial instinct would be that it doesn't matter and that your servicer has a right to see the income on you and your wife's joint return. That being said, it is just my first thoughts on the matter, with many thousands of dollars at issue, you may be well served to meet with a local attorney who can talk you through these issues and if nothing else, give you some peace of mind.
If you do end up filing jointly and providing your joint tax return to Navient, you may want to look into the REPAYE plan. Unlike IBR, which requires 15% of the discretionary income, REPAYE would only require 10%. I know it is still more than what you think you should be paying, but it would potentially lower your monthly bill.
Thanks for all your input. I agree with you that with thousands of dollars at stake I probably will check with an attorney. It is difficult to find an expert on federal student loans . Thanks again. AL
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