Hi everyone-new poster here with a lot of stress and anxiety as I am learning more about my current debt situation
Here are the details:
444K federal loan debt, PLUS loan with 6.1-7.65% interest and stafford with 6.1-6.65% interest
currently single, but getting married next year to a high income earner (~500K/yr)
fellow making 57K/yr currently
The biggest issue is that my 3 years of IM residency don’t count towards PSLF as it was a for-profit hospital 🙁 🙁 🙁
so at the end of fellowship I will only have 2 years of qualifying payments towards PSLF, though I am planning on working for a 501(c)
I would appreciate any advise here as I feel lost at what the best option is for me – should I refinance (and if so, then when?) or is sticking with PSLF worth it for me since my debt is so high?!June 6, 2019 at 9:05 am MST #219636Faithful StewardParticipantStatus: Financial Advisor, Small Business OwnerPosts: 516Joined: 06/12/2017
You need to talk to a tax advisor and a student loan consultant to make sure this works for your specific situation. But, if you plan to pursue PSLF, once you get married, you need to explore whether it makes sense to switch from RePAYE to PAYE and then file Married Filing Separately. This would prevent your spouse’s income from dramatically increasing your student loan payments; but, it would also mean your wife would be saddled with the MFS tax brackets, along with a few other less than desirable consequences. You’d need to determine if that solution works in your particular situation.
Michael Peterson, CFP® | Faithful Steward Wealth Advisors
https://ProsperousPhysician.com | (717) 496-0900ZZZParticipantStatus: SpousePosts: 702Joined: 06/18/2018
You’ll be making 700-800k plus between the two of you. Refi and pay it off.
Pretty sure loan forgiveness wasn’t intended for couples making high 6 figures.
Spouse knows you come bearing gifts, right?hightowerParticipantStatus: PhysicianPosts: 1485Joined: 12/07/2016
Yeah, that’s a lot of debt, but you two will be making loads of money. Should be no problem to pay that off in just a couple of years if you’re living appropriately below your means. Refinance and pay it off. Don’t sign up for any new debt in the mean time (meaning no big doctor house or car purchases until after the debt is gone).jhwkr542ParticipantStatus: PhysicianPosts: 1316Joined: 02/15/2016
This is essentially a math problem. Only two scenarios I see:
1. Switch to paye now and make payments until pslf. You’ll need to see the tax issues worth filing separately since your spouse will be paying a lot more in taxes.
2. Refinance and pay off in 5 years.
My gut tells me refinance will win out since those first few years’ payments didn’t count.CordMcNallyParticipantStatus: PhysicianPosts: 2844Joined: 01/03/2017
You could pay that off in a few years and that’s what I’d recommend.
“But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
― Benjamin Graham, The Intelligent InvestorFamilyFirstParticipantStatus: StudentPosts: 21Joined: 05/19/2017
I agree with the folks who say to refinance and pay it off. Your student debt:income ratio will be less than 1:1 once you’re married. I am assuming that your partner has no debt because you didn’t say anything about it above. From the various blog posts I have read, the gross amount of loans matters less than your debt:income ratio in terms of how long it will take to pay off.
As far was when to refinance, I would stay with whatever payment plan you currently have until getting married and then refi at that point.June 7, 2019 at 3:12 am MST #219800Gamma KnivesParticipantStatus: PhysicianPosts: 169Joined: 06/25/2017
Another vote for refinance after the wedding and ditch PSLF. With 8 more years to get PSLF the amount of forgiveness will be small and you should be ahead just paying it off quickly at a lower interest rate. You also don’t run the risk of something happening that makes PSLF not work.June 7, 2019 at 6:00 am MST #219820wideopenspacesParticipantStatus: PhysicianPosts: 1138Joined: 01/12/2016
I’m on team refinance and pay off. Should not be a big deal at your income level. We paid off my 70k of student loans in med school and residency while averaging an income of 70k and paying for daycare without it feeling painful. You got this. Congrats on the upcoming marriage!June 7, 2019 at 6:04 am MST #219821DAKParticipantStatus: Other ProfessionalPosts: 23Joined: 11/30/2016
You don’t address your future spouse’s perspective. Any debt? Is spouse willing to shovel essentially ALL savings into the debt you incurred? Hopefully yes if you are combining finances. But if you aren’t or for any reason there is hesitancy, then refi and repay may not be the best option. Your future spouse may be hesitant to pay off a bunch of loans immediately after tying the know.
Kids is another element (if imminent) in case either of you wants to take parental leave as that will reduce earnings significantly and may change the answer.
appreciate everyones advice!
I will be making 210k, and my spouse has about 150K in loans as well
Even if we file married but separate do you still feel refinancing is the best option? I think my debt to income ratio remains pretty high throughout the 8 years
Does anyone have spreadsheets to help me figure this out?June 7, 2019 at 3:13 pm MST #219995
thank you 🙂June 7, 2019 at 3:14 pm MST #219996FamilyFirstParticipantStatus: StudentPosts: 21Joined: 05/19/2017
So your combined income will be ~$700k and your combined student debt will be ~$650k.
You would need 8 more years at a qualifying company and need to go through all the hassle associated with keeping all your records to qualify for PSLF. Have you run the numbers on the student loan calculators on how much would be forgiven? If I was going to have a 1:1 debt:income or better, I would likely just refinance and get it done. I think it frees you up both mentally and financially sooner. When I ran my numbers on loans, I would have paid my loans off just one year shy of loan forgiveness.
I believe you have the means to pay it off quicker than PSLF would allow. What actually makes sense for you and your future wife given your other goals?June 7, 2019 at 3:40 pm MST #219997fatlittlepigParticipantStatus: PhysicianPosts: 1195Joined: 01/26/2017
Live off half of the smaller income. Do 401K and the rest goes to loans. It’s not rocket science.
I really appreciate everyones help!
I wish I could just pay them off as soon as possible-but when I see what my numbers would be on the PAYE plan it says I will have about 325K forgiven?! how can that be correct? And how can I walk away from the possibility of that? I really am just starting to get into learning more about finances but should I really be that worried about PSLF?June 7, 2019 at 4:26 pm MST #220003