Student loan and kids

[iamapharmacist]

Does anyone know how the student loan payment (income-driven or pay as you earn) plans are affected when you have kids? Does the payment go down?

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[confettiflyer]

Does anyone know how the student loan payment (income-driven or pay as you earn) plans are affected when you have kids? Does the payment go down?

Yes - the amount excluded from the calculation rises with each dependent you have.

Example case: You and your spouse make a combined $225,000/yr AGI (line 11, 1040).

Case A with no kids: The REPAYE IDR payment is 10% of your discretionary income above 150% of the FPL for your family size. Therefore, family size of 2, FPL = $17,420 * 150% = $26,130 is exempt. Therefore, ($225,000 - $26,130) * 10% = $19,887/yr / 12 months = $1657/mo student loan payment.

Case B with 2 kids: Family size 4 FPL = $26,500 * 150% = $39,750 is exempt. Therefore, ($225,000 - $39,750) * 10% = $18,525/yr / 12 months = $1543.75/mo student loan payment.

Note that if you use any of the online calculators, it appears whoever coded them never updated them for the latest FPL tables (which come out annually). I tested two and by back calculating, I noticed they were using 2016 numbers.

Quirky fact -- see the exact wording below from section 9 of the IDR enrollment form regarding family size (emphasis is mine):
"Family size always includes you and your children (including unborn children who will be born during the year for which you certify your family size), if the children will receive more than half their support from you. For the PAYE, IBR, and ICR Plans, family size always includes your spouse. For the REPAYE plan, family size includes your spouse unless your spouse's income is excluded from the calculation of your payment amount. For all plans, family size also includes other people only if they live with you now, receive more than half their support from you now, and will continue to receive this support for the year that you certify your family size. Support includes money, gifts, loans, housing, food, clothes, car, medical and dental care, and payment of college costs. Your family size may be different from the number of exemptions you claim for tax purposes."

The two bolded items represent a loophole of sorts, and I discuss these here. First, the fact that the form calls for unborn children means you can always claim an extra dependent so long as the child bearing spouse is pregnant. Since a pregnancy is 40 weeks and the certification period is always 52 weeks, any pregnancy counts. There is no requirement for the unborn child to actually be born. Further, pregnancies < 6-12 weeks can exist without noted medical documentation. Therefore, it is unprovable. You could theoretically have sex with your spouse, believe that a pregnancy exists, fill out the form and declare under penalty of perjury that you/your spouse are pregnant, claim the extra dependent on the IDR form, receive the lower payment, and not actually give birth in 30-40 weeks.

This differs from how exemptions work on the 1040 you file with the IRS, which demands an actual birth event happen + social security number for the dependent. The IDR form explicitly calls for unborn fetuses to count, and acknowledges the difference in that final line at the end.

 

[iamapharmacist]

Anyone know how filing taxes as married but with "injured" spouse will affect the income driven plans? I was just informed that this could somehow exclude my spouse's income in calculating the monthly payment... not much luck in googling.

 

[JustFillIt]

Does anyone know how the student loan payment (income-driven or pay as you earn) plans are affected when you have kids? Does the payment go down?

Well - I have 5 children and I have been paying income driven student loans for a while. Essentially they are deductions and I’m nit exactly sure how it’s calculated. All I can say is that I have absolutely zero incentive to pay them off altogether regardless of what Dave Ramsey says.

I pay 350/month on an income of about 125k or so. Easy peasy as far as I’m concerned. And it’s going to be forgiven in about 12 years in my case (I have not made a single payment in 13 months). I certainly don’t consider it “financial cancer” according to Ramsey.

I just consider it a Bill I have to pay for the time being and I plan accordingly. I throughly encourage anyone to have lots of kids for the financial benefits. Student loans is just the start. The tax benefits are very bullish...

Then you can go to the next level and teach your kids to bake cookies and sell them door to door while looking depressed. That’s just one idea - I have others as well.

 

[iamapharmacist]

Well - I have 5 children and I have been paying income driven student loans for a while. Essentially they are deductions and I’m nit exactly sure how it’s calculated. All I can say is that I have absolutely zero incentive to pay them off altogether regardless of what Dave Ramsey says.

I pay 350/month on an income of about 125k or so. Easy peasy as far as I’m concerned. And it’s going to be forgiven in about 12 years in my case (I have not made a single payment in 13 months). I certainly don’t consider it “financial cancer” according to Ramsey.

I just consider it a Bill I have to pay for the time being and I plan accordingly. I throughly encourage anyone to have lots of kids for the financial benefits. Student loans is just the start. The tax benefits are very bullish...

Then you can go to the next level and teach your kids to bake cookies and sell them door to door while looking depressed. That’s just one idea - I have others as well.

$350?! wow impressive. Is your spouse income not considered? I've been paying $700ish on $125k. I'm thinking since I got married and filing taxes jointly, I would have to pay more due to my wife's income being included.

 

[mentos]

Another member got banned?? Come on.

 

[Xenophylia]

Yeah I noticed he'd gotten the axe also? Did he piss on one of the snowflakes? All the posts of his I've seen seemed pretty harmless....

 

[mentos]

Yeah I noticed he'd gotten the axe also? Did he piss on one of the snowflakes? All the posts of his I've seen seemed pretty harmless....

Yet I'm somehow still here.

 

[PharmtoCS]

Possibly banned due to his anti-mask posts...but come on. No need to throw the baby out with the bathwater.

 

[thecoolpharmboi]

Well - I have 5 children and I have been paying income driven student loans for a while. Essentially they are deductions and I’m nit exactly sure how it’s calculated. All I can say is that I have absolutely zero incentive to pay them off altogether regardless of what Dave Ramsey says.

I pay 350/month on an income of about 125k or so. Easy peasy as far as I’m concerned. And it’s going to be forgiven in about 12 years in my case (I have not made a single payment in 13 months). I certainly don’t consider it “financial cancer” according to Ramsey.

I just consider it a Bill I have to pay for the time being and I plan accordingly. I throughly encourage anyone to have lots of kids for the financial benefits. Student loans is just the start. The tax benefits are very bullish...

Then you can go to the next level and teach your kids to bake cookies and sell them door to door while looking depressed. That’s just one idea - I have others as well.

You are hilarious 😆 although great idea I plan to have 4 kids so hope that works out. Maybe one of them will become the next Jeff Bezoa xD