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~$65,000 Student Loan Advice
September 19, 2020
1:38 am
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Hello all,

I appreciate any help you’re willing and able to offer. I am responsible for ~$30,000 Stafford loans in my own name and ~$35,000 Parent Plus loans in my parents’ names. The average interest rate for my loans is 4.63% and the average rate for the parent loans in 6.64%. I am in the nursing profession about to start my first job at a 501c3 non-profit. My fiance is a teacher and has no student loan debt. We plan to get married in 2021 or 2022.

I make ~$60,000 and he makes ~$40,000 a year.

I hope to qualify for PSLF. My parents are also teachers, so I wonder if I could apply for PSLF on their loans as well.

I am pretty familiar with the PSLF program, but I want to make sure my assumptions are correct:

1. I cannot consolidate both the loans in my name AND the loans in my parents’ names to a consolidated loan, right?

2. Due to significant other and I both being in middle-income fields AND taking advantage of tax saving vehicles (HSA, 401k), it appears ICR (with the hopes of PSLF) is the best repayment plan. Alternatively, PAYE also looks like a good option – any advice here?

Thank you for your help,
$Ramen

September 19, 2020
1:42 am
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After reading another post, it looks like the StudentAid.gov estimator does not give an accurate estimate regarding ICR repayment – sounds like PAYE is the better options for me.

September 19, 2020
2:15 am
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Last couple questions:

It’s now clear that Parent Loans should not/cannot be consolidated.

Now my plan will likely be to refi those loans in my name. I still wonder which payment plan for my loans is best in this case?

Lastly, due to our joint incomes, are there any resource available to decide between married filing separate vs. together? It looks like our combined AGI when filing jointly makes PAYE unavailable.

What payment plan/refinancing/tax filing status might be ideal for us here (understanding that this is not legal/tax advice :))

Thank you,
$Ramen

September 19, 2020
2:15 pm
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Hello,

Lots of great questions here.

First, You are correct that you cannot and should not consolidate the Parent PLUS loans with your loans. However, with your parents potentially being PSLF eligible, you might want to explore that option prior to refinancing. This is important because there is no way to “undo” a private refinance.

The PSLF options for your parents will depend upon a variety of factors, but it is possible to have parent PLUS loans qualify for PSLF. That being said, there are a variety of ways children can help with Parent PLUS loans.

Shifting to the loans in your name, PAYE is often an excellent choice. One thing to keep in mind is that your goal is not to get the lowest monthly payments or even to qualify for PSLF. Your goal is to eliminate the debt as painlessly as possible. For some that may be PSLF, for others, it might be aggressive repayment or some other strategy. Filing separately may get you lower payments, but if you are eventually going to pay the loan off in full, it might not be the best option. This article covers the decision making that goes into the decision to file separately or jointly.

Finally, the tax strategy goes beyond the decision to file jointly or separately. There are many other tax considerations that you may want to investigate.

September 19, 2020
10:11 pm
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Thank you Mr. Michael Lux – those articles were quite helpful.

It looks like our incomes are too high to make any of the income plans feasible for PSLF. I just count this as a blessing and keep my repayment strategy simple.

Thank you,
$Ramen

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