Hi everyone,

Boy I am glad I found this site. People who actually know what they’re talking about. I have been putting off paying my loans for a few year, but now am employed full time at a public college and need to start working on my loans. I have a total of 12 loans, tipping the scales at $84,000. I plan to consolidate these loans, and then apply for PSLF and use the REPAYE option.

I have a lot of questions, but the one that comes to mind currently (besides “is this a good idea?”) is that if my wife and I file separately, is her income counted towards the total income the repayment is based on? Also, are there some other resources I should consider consulting?

It’s really unfortunate that a) I took out all these loans without fully understanding what that meant (at least I am working in the field), b) repayments are calculated by gross income (when about 40% of my check goes to taxes, health care, social security, and the state retirement system), and c) that it is likely still happening to my students.

Thanks for any input!!!

David

Hello David,

This site has been very helpful to me too.

Regarding spousal income: it depends on the repayment plan you choose. IBR allows you file separately and not have to report your spouse’s income, but REPAYE does require you to report your spouse’s income, and it is used in factoring how much you pay. One caveat, however, is that the new income recertification sheets that you have to fill out annually now claim you have to report your spouse’s income, even if you choose IBR where it shouldn’t be a factor. This just happened around December, so I’m waiting to see if anyone had any issues in trying to recertify for IBR with this new required information.

Yes, I didn’t fully understand what it meant when I took out all the loans myself.

I know that with IBR, payments are based off of Adjusted Gross Income (AGI), which is less than the Gross Income. I think it’s the same for REPAYE.(?) AGI is only used when you send them your tax returns to calculate your payments. If you choose to supply alternative documentation of income, then they will use the Gross Income only.

Best resources are found on the dept of ed website. Read all the Q & A ‘s and info sheets regarding the IDR Plans and the PSLF program. More info is on the actual applications themselves, as they are often have good information on them. (for example, the extra information included on the PSLF employment certification form).

The PSLF program is definitely not easy, but if you do decide you want to try, make sure you send in your empt. certification forms regularly to ensure your payments are counting. As soon as you send in one form, however, all of your qualifying loans will transfer to FedLoan servicing, so don’t send in one until you are sure you want to do it, because Fedloan Servicing has a bad history of botching things.

Another bit of helpful advice…if you have any doubts that you might not finish the program or be in a career where you’ll have to pay them off, consider consolidating only the loans necessary to make them eligible for PSLF. For example, if you had 5 qualifying direct loans with low interest rates, and a bunch of stafford loans which had high interest rates which did not qualify, I’d consolidate the stafford loans by themselves and leave the direct loans untouched. That way, you’ll have 5 direct loans and 1 consolidated direct loan, and if you ever did have to pay them off, you can target payments towards the loans with the highest interest to pay them down faster. If you consolidated all of them, you won’t be able to target payments as it is all just one loan. Plus, the consolidation rounds up your interest rate by 1/8 of a percent, so the fewer loans in the consolidation the better. (I’m not sure if you need to have one direct loan mixed in with the non-direct loans in order to do the consolidation….I thought you did, but after doing it was told otherwise)

Thanks for the reply @hart47 (not the spammer). I appreciate the guidance. On the phone, the gentleman from Fedloan said there was an option in the PSLF application to indicate to the processors to select the plan that would result in the lowest possible payment for me, and I assume that’s what I will choose. In the meantime, we will file our taxes separately just in case.

I see on the Employer Certification form there is an area that is to filled out by the employer. I work for a very large community college, and not sure who I would approach to ask about this, any thoughts?