Married People: IBR vs forbearance

[codeb1ue]

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Not sure if this was covered yet but I was curious about this situation. My wife will be making a fairly decent income. However she is also in significant school debt from pharmacy school. I was initially going to file taxes separately and just do an IBR but realized it may be more beneficial to just focus on her debt during my residency years and take advantage of filing taxes jointly. I'm not very good with taxes yet and wasn't sure how big of an advantage there really is in filing jointly vs separate.

Anyone in similar situation decide between IBR and forbearance?

 

[DOctorJay]

similar situation here, search previous posts. i decided to consolidate and start paying. cheaper for me than IBR and I can consider IBR again next year or perhaps after July when they should take into account spouse loan burden. forbearance can add A LOT of interest. do the calculations for repayment with IBR versus a consolidation, cheaper for me to consolidate and start paying it now over 30 years and simply accelerate payments on my own once out of residency.

not sure how the tax advantages work but that shouldn't be an issue after July.

 

[nontrdgsbuiucmd]

I have consolidated loans and started the IBR last year when it first became available. Something to consider is that there's a loan forgiveness component such that if you work for a not-for-profit or government entity, and provide proof of this to the loan folk, and make 120 on-time payments total, any remaining federal student loan debt (subsidized or unsubsidized, but this does not include private loans) is forgiven, & no tax consequences. I'd expect to do residency at a not-for-profit hospital, + subspecialization; that'd get me 6 years into that 10 year requirement (10 yrs do not have to be sequential). A number of hospitals in my area are also not-for-profit entities, so maybe I'd be somewhat limited for 4 yrs after training? But all loans go away..

re: filing taxes jointly vs. separately -- probably depends on each spouse's income as a percentage of household income; if you + spouse earn similar income, should not matter much if you file separately; if you earn 90% of household income you'd likely do much better filing jointly. Only tax deduction I can think of that you'd lose in filing separately is the deduction for interest paid on student loans, but that's only allowed up to 2,500 per year roughly; does not do much for those of us paying $1,000 interest per month..

 

[PostLessOne]

One comment : if you actually read the official IBR document (which is a statement in writing from the government) you'll see that to qualify for loan forgiveness you have to make 120 total payments while employed "full time" (30 hours a week) at a non-profit.

Nothing stops you from working those last 4 years of the IBR with a 'part time' job as a private practice attending and a 'full time' job working direct for the hospital to get loan forgiveness credits. I suspect you could work out an arrangement where the call the hospital would require you to take anyways in order to get privileges would be paid for as a direct employee of the hospital.