Menu

Huge Student Loan Debt with High Income Spouse-HELP!

Home Student Loan Management Huge Student Loan Debt with High Income Spouse-HELP!

  • fatlittlepig fatlittlepig 
    Participant
    Status: Physician
    Posts: 750
    Joined: 01/26/2017
    medical school scholarship sponsor

    Under the Fatlittlepig plan, loans are discharged in 1-2 years after which the money that was going towards loans goes towards investments and in a couple of years you are a millionaire and in a few years you are a multimillionaire. Or you can do the public loan forgiveness and live with uncertainty for 10 years to save 300K, which under my plan would be a drop in the bucket after 10 years.

    Avatar trebizond 
    Participant
    Status: Resident
    Posts: 97
    Joined: 12/31/2017

    FLP has a good point that there is a *great* psychological benefit to paying off all those loans through an aggressive payment plan using your income(s). It’ll teach you financial discipline and saving habits that after you’ve paid the loans off could potentially reap you millions in investments. The alternative of pursuing forgiveness prolongs the process and could reinforce habits that lead to a less favorable financial outcome. Still, you have a huge shovel with that combined income, so should be fine.

    #220068 Reply
    MPMD MPMD 
    Participant
    Status: Physician
    Posts: 2158
    Joined: 05/01/2017

    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?

    Click to expand…

    I get why this is tripping you up but you can’t just look at that 325k (if that’s in fact correct).

    You also need to calculate what MFS for 8 more years at a combined 700k does to your taxes.

    #220070 Reply
    Liked by Lordosis
    Avatar GPGP 
    Participant
    Status: Physician
    Posts: 153
    Joined: 05/02/2017

    I want to echo what other people have said – It’s technically legal, but I do not think the spirit of the program was ever intended to forgive loans of those making combined 700k/year.

    And as FLP and others said, you set up far better habits by using your own shovel.

    #220073 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 222
    Joined: 01/10/2016

    No reason to even consider PSLF. The cost of married filing separate is not insignificant. You are probably going to make more income than you expect and if you are just paying off the loans the extra income will be considered a plus and you won’t be thinking of it as reducing your amount of forgiveness.

    It seems like you are worried your loans are a burden to future spouse. Your money is all one big pot but if it helps you a can just put 100% of your paycheck and bonuses to loan payments and loan will be gone in 3 years. The more you make the faster they are gone. I’m sure that your spouse will be able to cover living expenses while you do this. Once the loans are paid you will be glad you did it and you will have this extra money you won’t know what to do with.

    #220094 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 222
    Joined: 01/10/2016

    I want to echo what other people have said – It’s technically legal, but I do not think the spirit of the program was ever intended to forgive loans of those making combined 700k/year.

    And as FLP and others said, you set up far better habits by using your own shovel.

    Click to expand…

    I don’t get too hung up on the “intent” of PSLF.

    That is like saying “Oh, I think that the pass through deduction is really meant for florists so I’m not going to use it because that is my interpretation of the tax law. I qualify according to the rules but I just don’t think I was who they were thinking about when this change in tax code was made.” We can only speculate on intent of lawmakers and we should not make decisions based on our interpretation of their intent.

    PSLF is either a good decision for the borrower or it is not. In this case it is probably not but I can definitely see situations where a doc pulling in $700K could benefit from the program.

     

    #220132 Reply
    Liked by doctordebt, Tim
    Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 456
    Joined: 06/23/2018
    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?

    Click to expand…

    I am NOT an expert on PSLF….

    However, you have to understand what your payments will be for the next 8 years. Will it be $300K? They forgive the $325 because of all the interest accrued? Also, you will pay taxes on the $325K, so you better have about $100+K saved up for that. So, your total would be over $400K and 8 LONG years to be thinking about your debt, worried they will not end up paying it off, concerned that you mess up ONE payment, the program folding, etc.

    I am in the camp of living like a resident, refi, and pay it off fast!

     

    #220136 Reply
    Avatar East coast 
    Participant
    Status: Other Professional
    Posts: 112
    Joined: 03/06/2016
    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? 

    Click to expand…

    I am NOT an expert on PSLF….

    However, you have to understand what your payments will be for the next 8 years. Will it be $300K? They forgive the $325 because of all the interest accrued? Also, you will pay taxes on the $325K, so you better have about $100+K saved up for that. So, your total would be over $400K and 8 LONG years to be thinking about your debt, worried they will not end up paying it off, concerned that you mess up ONE payment, the program folding, etc.

    I am in the camp of living like a resident, refi, and pay it off fast!

     

    Click to expand…

    PSLF forgiveness is not taxed

    #220196 Reply
    Liked by Peds
    Avatar East coast 
    Participant
    Status: Other Professional
    Posts: 112
    Joined: 03/06/2016

    Up to you on figuring out exactly where the cut off point of the uncertainty of PSLF is worth it or not. This forum has turned decidedly anti-PSLF lately – apparently it’s become immoral to many here.

    #220197 Reply
    Avatar BCBiker 
    Participant
    Status: Physician
    Posts: 222
    Joined: 01/10/2016

    Up to you on figuring out exactly where the cut off point of the uncertainty of PSLF is worth it or not. This forum has turned decidedly anti-PSLF lately – apparently it’s become immoral to many here.

    Click to expand…

    I usually favor it. This is just a bad fit. No payments made in training. High income.  Married filing separately is costly over a long time horizon. If OP was single and planning to stay single, no doubt that would be the way to go. Also, should be easy to pay off without hurting lifestyle and will get a great rate with the income on refinance.

    #220209 Reply
    Avatar SLC OB 
    Participant
    Status: Physician
    Posts: 456
    Joined: 06/23/2018
    PSLF forgiveness is not taxed

    Click to expand…

    Good to know! Thanks!

    #220212 Reply
    Liked by EndoRobert
    Lordosis Lordosis 
    Participant
    Status: Physician
    Posts: 959
    Joined: 02/11/2019

    You got something better then PSLF. You gave a high earning spouse!

    I think the interest saved by refinancing and paying it off quickly and the better tax treatment for filing married will close the gap on the difference enough to make the hassle and risk not worth it.

    Also to use PSLF right you should be living like a resident either way. One way because you are paying the loans you owe. The other way is to save up the side fund with the difference between the minimum payment and the rapid payment. If you plan on going for PSLF so you can live larger then you are not using the plan appropriately.

    Your lifestyle should be the same either way but you will be at a point to expand it much faster if you pay down the loans rather then wait 8 more years.

    “Never let your sense of morals prevent you from doing what is right.”

    #220216 Reply

Reply To: Huge Student Loan Debt with High Income Spouse-HELP!

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear