How can marriage affect loans?

[PassingDays11]

Advertisement - Members don't see this ad

Hey all!

I have been with my significant other for some time now and would almost positively be asking her to marry me soon if it were not for medical school and the possibility of her assets interfering with my loans/financial aid.

Does anyone out there have any experience or advice to give me on the subject?

I am afraid that if we married her salary would count against me and I would not be eligible for Perkins loans, etc. Is this true? And if it is how much of a negative is it? Is it worth postponing marriage to save some dough?

Anyone with knowlegdge on this subject please help!!

 

[PassingDays11]

Here's a little more to consider:

Me - single:
I should qualify for subsidized loans (i.e. won't start accruing evil interest until repayment period begins) under the Stafford and/or Perkin's Loan programs. This should take care of $8,500 - $13,500/ year of cost.

I should also be able to pick up the rest with an unsubsidized Stafford Loan (interest accrues right away at around %6/year...ahhhh!).

Me - married:
I'm not sure if I would be able to have any subsidized loans with a wife that makes about 25K/year. If this is the case then $40,000/year at 6% interest over 4 years comes to about $17K that I wouldn't have had to pay back if I were still single. Take into account residency of about 5 years and that amount becomes about $38K more! *Please check my math*

The FAFSA requires individuals to list spousal financial information, so I'm not sure if there is a way to get around this.

If anyone knows anything about this, PLEASE POST AND HELP ME!!!

I know $25K it's not a huge income but in order to get the subsidized loans one must have a certain amount of need. That need is calculated with the FAFSA.

Does anyone know how high the FAFSA Estimated Family Contribution (EFC) can be in order to still be eligible for subsidized loans?

 

[Miami_med]

There is no Perkin's loan for med school. The only thing that being married can really impact is Subsidized Stafford. If your wife makes a lot of money, you might have to borrow 38,500 unsubsidized vs. 30,000 unsubsidized and 8500 subsidized. If she makes $1,000,000/year, you'd still be able to get the 38,500 unsubsidized. (You can always borrow 38,500, but the subsidized portion shrinks with income). Figure at 6.8% over the four years + 3 max years of hardship deferment in residency for the worst of the damage. Interest remains as simple interest during this time, so here is your calculation:

(8500 * .068) + (17000 * .068) + (25500 * .068) + (34,000 * .068) + (34,000 *.068)*3 = $12,716

Now realistically, if she makes only $25,000/year, you will probably lose very little. For my wife, son, and I, our annual contribution was 0 on 20k/year (her income), which meant I got the full subsidized amount. Your number should be low. It should hurt you very little to be married.

There are also some benefits to being married. She will receive tax benefits if she is married, because you have no income and she can file a joint return. Also, if you haven't moved in together, having some communal income during med school will make things MUCH EASIER. In many places in the country, you could live on her income, meaning that you will only have to borrow for tuition and books.

 

[PassingDays11]

Thanks for the help miami-med!

I think you may be mistaken about the Perkins Loan, however. Here is just one link that I found that seems to apply: http://chicagofinancialaid.northwestern.edu/medical/2006-07/perkins.htm

The Perkins loan would give up to $5,000/year more. That would put me at $13,500/year max of subsidized loans. Ending up with $54,000 of subsidized loans in the end instead of the same amount in unsubsidized loans seems like a big deal in terms of interest savings.

Good to know about your situation and that things have worked for you. I wonder how much of a difference having a child made for you. Thanks for pointing out the benefits of marriage too. I realized that we could save money on insurance through her job but didn't even think that her having a spouse with no income could help too!

Does anyone know exactly how the EFC is calculated, or have a link to where I can find out?

Thanks!

 

[Miami_med]

Ah,

My bad about the Perkins. For some reason, my level of crushing poverty has never been seen as a sufficient level of crushing poverty to qualify for this, even before med school. Good to know.

By the way, I do think that there is an online EFC calculator somewhere, but I can't remember where it is. You could always try and google it.

 

[PassingDays11]

Hmmm, I wonder how they decide to give the Perkins loan. It all gets pretty complicated. My best bet is to meet with the financial aid officer at my school, but that won't be for awhile. Thanks for the help in the mean time.