June 8, 2015
Hi all, my husband and I were married in Nov 2014 and so we filed our taxes jointly in 2014 (that was a BIG mistake). We both have loans through FedLoan totaling approx. 125k. Because we filed our taxes jointly (we had no idea this was affect our loans like this) our gross combined income is being considered for our monthly repayment. We’re enrolled in the IBR/IDR plan and our payments are exactly 10% of our gross monthly income, which we simply can’t afford. I am here to ask if there’s any public programs or ANYTHING out there that can get FedLoan payments lower than 10% of our monthly income.
We’re trying to save up for a down payment on a house and be contributing members of society but with a loan payment equaling as much as a mortgage I can’t see through this.
Any advice, thoughts, etc. are appreciated.
May 3, 2014
This is a great question. I have a couple initial thoughts.
First, what makes you say that filing jointly was such a big mistake? Because you both have student loans, wouldn’t you both be expecting to pay 10% of your income? (that being said it would be slightly lower by filing separately, but not huge… assuming you both are on IBR) Or am I missing something?
Second, have you looked into amending your tax return? Tax law is miles away from student loan law, but if you used an accountant, could they go back, amend your return and have you pay the IRS the extra you would have for filing separately?
Going forward, I think your best bet is to do the math and compare IBR savings against tax savings. With you both having student loans, it will be interesting to see which option is truly better.
As far as plans that require less than 10% of your monthly income, there really isn’t one. (Note: try to avoid the mistake of deferring your loans, the interest will continue to grow and your problem will only become worse)
Good luck, and keep us posted on what you find out!
June 8, 2015
Hi there, thanks for the response! The only reason I said it was a mistake to file jointly was because when I called and spoke to one of the student loan hotline folks, she said that if I was to have filed my taxes separately (she was saying this based on my salary), my payment would be cut by 75% from what it is now, because my husband makes so much more than I do.
July 9, 2015
No worries. Everything will be fine=)
What I do not understand (both from the government side but especially from the borrower side) is with IBR, if the payment they require doesn’t even equate to the interest on the loans, then it is nothing less than a trap. Just as the Sherpa says above that deferment will cause the balance to grow, so it is with many of these IBR payments.
To me it’s like car shopping and only looking at the monthly payment, without consideration of the loan or lease terms.
I am on IBR, and I had a period when I was out of work and used the deferment, and now I send them between $1,100 – $1,200 a month. Because of accrued (but thankfully not capitalized) interest, only about $100 of that $1,200 goes to principal, What is really retarded is my IBR payment is be $755.00, so if I actually did that I would be going in the hole further to the tune of about $235 every month. On a balance of $172K (principal + accrued interest) I am doomed…my best option is to die before my loan period comes due and they 1099 the forgiven balance.
I’m actually in a bit of a panic about this myself but can’t seem to find a good answer. The student loan repayment calculator isn’t helping and I don’t seem to understand how any of the math is calculated. I have $280,000 and my wife just recently refinanced her student loan of $85,000. She makes significantly more than I do and the calculator has me jumping from my current 952/month payment to 1888/month. And, when I play with it and recalculate as single (it drops to 500); MFJ (1888); and MFS (1788). I just don’t get it. Do they expect my wife to be paying my loans? Because 1888 is 75% of my paycheck. Am I going to have to divorce my wife ?
May 3, 2014
If your wife also has federal loans and is also on an income based plan, you should break even as far as payments go. Your payments will actually be determined by your loan balance rather than your income. So while your payments will go dramatically up, hers will be much lower (because your debt is much larger). The calculator does not handle this situation well.
The best estimate might be your single payment plus her single payment. The numbers will be split differently, but that should give you a close estimation of your combined total obligation.
In other words, it probably isn’t time to call a divorce attorney quite yet.
Does this make sense?
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