Hello Heather,

Fun question for you… assuming that I’m submitting alternative documentation for my IBR, in the form of my paystubs, how are pre-tax deductions (i.e. health insurance) counted?

For example, my gross pay might be $3,000 a month… but if I have $1,000 in health insurance pre-tax deductions each month my “take home” is only $2,000.  Should the IBR payment be calculated using the $3,000 or the $2,000?

I just had a conversation with my Direct Loan Servicer, and they stated that they use the gross pay on the pay stubs.  The $3,000 number.

I maintained that that seems illogical, since if I used my taxes my AGI reflects the lower number after pre-tax deductions.

They agreed, but basically said “those are the rules!”  They couldn’t provide anything in writing, of course.

The closest reported issue I can find is here:
http://www.forbes.com/2010/03/22/income-based-repayment-overpay-personal-finance-student-loan-income.html

Any ideas? I really want to use the lower number, after pre-tax deductions, while also using my paystubs… since that is what I feel is reflective of my actual income.

Thanks!

- Sam