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IBR Question

Started by JCP, July 18, 2019, 09:32:25 am

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JCP

So my wife has a sizable amount of law school debt in her name and is no longer working. I have continued to pay these loans but is a huge burden.  Is there a way for her to qualify for IBR or anyway to reduce this burden?  I am just looking for some thoughts.

TheCollegeInvestor

She can totally file for IBR, but you may also consider changing your tax filing status to lower her payments more:
https://thecollegeinvestor.com/17807/the-math-behind-married-filing-separately-for-ibr-or-paye/

Also, realize any amount forgiven under IBR is treated as taxable income, so you could face a "tax bomb" at the end.

You might run some numbers of IBR/Tax Bomb versus refi, and if you're tackling it together, and your income is sizable, maybe you just pay them off?

JCP

Who would you recommend discussing the best option for us moving forward? I would like talk with someone fluent in the best options and able to run some different scenarios for me.

TheCollegeInvestor

It's actually a bigger tax issue than student loan issue. You should speak with a tax professional/CPA and understand how your taxes might change.

Then, while sitting together, run the student loan repayment estimator here: https://studentloans.gov/myDirectLoan/repaymentEstimator.action

You can then compare your tax difference to loan payment savings and see what makes sense.