My wife and I recently got married and both have student loans. She is fortunate enough to have PSLF, however this has become an issue because of our taxes. I am in much more debt than her so I refinanced because the interest rate was half (I was previously paying 7.2%). Our plan was to file separately to keep her payments low on the PSLF and pay mine off over the next year or two. Unfortunately, I found out that because we are married but file separately it moved me up a tax bracket and now I have to pay about $8,000 in additional taxes that I had planned to put towards my loans. My question for you is if we file jointly, will the government consider my loan and allow only my wife to continue to pay 10% of only her income or force us to pay 10% of our joint income? I wasn’t sure how this would work because my loans were consolidated and refinanced through a private lender. Any advice you have would be greatly appreciated. Thank you for your time and consideration.

Kramer174 - 22 April 2016 01:16 AM

My question for you is if we file jointly, will the government consider my loan and allow only my wife to continue to pay 10% of only her income or force us to pay 10% of our joint income?

Kramer - I think the government will calculate your payment based on your joint income.

I ran into this exact same problem recently, with pretty much the same set of facts. Because the married filing separate tax brackets are different from the MFJ tax brackets, you are penalized by filing MFS. In our case, it was for a similar amount.

When I ran the numbers, I decided that it was best to pay off my future wife’s student loans rather than relying on PSLF.

I think more people should know about this! PSLF isn’t always the solution people think it will be.

-Biglaw Investor
http://www.biglawinvestor.com/