Hi Heather,

My spouse and I have what seems to be a rather unique situation and I can’t find a lot of great info out there for people in our spot. I do realize in many ways that we are fortunate in our situation and potential income, but we still need some help!

So, to start with ugly:

we have about $440,000 combined debt. She has 270ish, and I have 170ish.

On to a bit of good:

We were married this past August.

She is a doctor who will always work at a non-profit hospital, and she has already been making IBR payments for three and a half years. As long as the government does not change the plan, we are hoping that much of her debt will be forgiven in 6.5 years.

I am a lawyer who will probably not work in the non-profit sector and don’t expect my loans to be forgiven. I just graduated and started making payments.

Now the complicated part. This year (basically July-July), I will make about 50k in my job. She makes 190k. Starting this coming July, she goes into fellowship and her salary will go down to around 65k for the following four years. Starting in September or so, my salary will go up to about 170 and will rise by 10-25 per year for the following three years, not including bonuses (which are likely to be 10-40k per year).

So, one of us will have a high income while the other has a relatively low income every year for the next four years. Because we don’t envision my debt ever being forgiven, it seems prudent to pay as much as we can whenever we can on my debt. But by the time my wife gets out of fellowship, she will have had 8 years of payments under her belt, and we’d only be paying full for two years at that point, potentially seeing 200k+ forgiven. (her IBR payment on a 60k salary had been about $600 a month, while it is at almost $3000 per month at her current salary level).

So this all brings me to the dance between IBR and filing taxes separately or jointly. Everything we have read says that if you file separately, only your income is considered for IBR. So we thought that would make sense for us to do, especially once she starts fellowship so that we can minimize her payment and have more of it forgiven after ten years. But when we use the FSA payment recalculator to try and estimate the differences, it keeps giving us the same numbers. Is there something I am missing?

Is there any other advice you can offer us as to what to think about or where to go to figure this out? We have done pretty extensive online research and have not found much that is helpful for our unique situation. Have you seen other people with a similar situation to offer any advice based on what worked for them and why they chose the route that they did? We have no kids and don’t own any property… would filing jointly really benefit us much if filing separately would reduce her IBR payments by a significant amount?

Any help or advice that you could offer would be hugely appreciated.

Thank you!

Hi.  Things are complicated when both spouses have significant student loan balances.  If you file jointly, a combined monthly payment is calculated based on the joint income, then that combined payment amount is divided into 2 pro-rated shares to determine each individual’s payment.  For example, pretend the joint income resulted in a $1000 payment due, and say the joint debt was $100,000 (spouse 1 owes $25,000, spouse 2 owes $75,000).  Spouse 1 payment would be $250, spouse 2 $750.  Filing separately would mean that the lower earner would have a lower payment, and the higher earn would have a higher payment. 

Sounds like you guys want her payment to be the lower payment, which can result when 1) she is the low earner, and 2) you file separately. You’ll need to trick the calculator to really compare: log in as you and run it with your income and your loans only, then add her loans and run it again using joint income.  Then log in as her and run it with her income and loans only, no need to run the joint again. 

And remember, you can always pay more than what is due on your loans, so aggressively repaying your debt doesn’t require any fancy repayment plan selection. 

Oh and don’t forget your wife needs to do the Employment Certification for PSLF.