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RePAYE Clarification

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  • Avatar drummerx139 
    Participant
    Status: Resident
    Posts: 6
    Joined: 02/14/2018

    Just got off the phone with a student loan advisor who gave me some new advice/info that I was not aware of and trying to see if it’s actually true or not.

    My situation:

    -currently enrolled in RePAYE, around $400K in student loans

    -wife has $100K in student loans and finishes her grad program in December, we will use the grace period and avoid starting her payments until around July 2020.

    -when we start paying towards both our loans in July 2020, our combined discretionary income will be $100K

    I thought this meant that if we were both enrolled in RePAYE, I would have to pay 10% annually of our discretionary income AND she would have to do the same, so $20K annually to our student loans.

    The advisor told me that our payments are essentially combined so that since my loan balance is 80% of our combined total, my payment would cover 80% of that ($8,000 annually) and my wife’s would cover the other 20% ($2,000 annually).

    Is this true?

     

    #237878 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 7958
    Joined: 01/09/2016

    Sorry your question got overlooked! I just asked our resident student loan expert, Sim, and this is what she replied:

    >>What your advisor told you is correct. In all Income Driven Repayment plans where you have spouses are MFJ*, your payment will be calculated proportionately to the percentage of the aggregate loan balance. (REPAYE will always consider you MFJ even if that is not the case.)

    The payment breakdown you listed is true if you are both in REPAYE. But what if you are in REPAYE and your wife chooses a different repayment plan? You would have to calculate her payment using the same exercise. Let’s say she opts to do the old IBR, in which you would pay 15% of your discretionary income. 15% of $100k is $15k. Her loans are 20% of your total balance, so she would pay 20% of $15k, or $3k/year. Since you are in REPAYE, you would pay $8k from the first round of calculations.<<

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #238605 Reply
    Avatar FutureDoc 
    Participant
    Status: Resident, Physician
    Posts: 124
    Joined: 04/24/2016

    I agree with Johanna, your IDR calculation will be split between your loans and your spouses. This is exactly what has happened to me and my spouse while we have been in repayment in training.

    #238681 Reply
    Liked by jfoxcpacfp

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