I have 4 questions having to do with IBR.

1. My husband has been making payments on his direct consolidation for over two years now and we are comfortable with the payments.  His payments are on the 25-year extended repayment plan and he works in the private sector.  I on the other hand, am entering a public service field and hoping to qualify for PSLF, so when I filled out my loan consolidation application, I indicated I wanted IBR.  I just want to clarify, will my husband be able to continue with the extended repayment plan he is on, while I am on IBR, or will his repayment plan be switched to IBR?

2.  I had read a few places that if income increases enough to exceed the 10-year payment amount on IBR, then you stay at the 10-year payment amount.  If I reached this point (or perhaps even before I reached that point) and found my loan payments too high on IBR given other bills, would I then be able to switch back into the 25-year repayment plan or would my only option be to switch into the 10 year plan?  I just want to check because with the way the ratio works, I will have the larger payment of the two of us because I have the most debt - but because of my career, I am almost guaranteed to also have the lower income!  My husband also has to make huge private student loan payments, so he cannot afford to cover the inflated IBR payment I’ll be getting because of his higher income.  So I need to know if I will be able to switch to the lower 25-year payment if I have to.

3.  My third question is a check on understanding - I’m hoping you can confirm I have this straight…  Lets say a couple were to both apply for IBR on their loans.  Lets say Spouse A makes 50k per year and has 25k in loans and Spouse B makes 25k a year and has 75k in loans.  In this case, the servicer would take the total AGI of the couple (75k), subtract out 150% of the poverty line (currently $23265 total given a family size of 2), and then use this new figure ($51735) as the discretionary income to calculate the payments, correct?  To get the payments, they would multiply the discretionary income by 15% and divide by 12 (in our example, this would yield a total combined payment of $646).  Then, they would determine the ratio of each spouse’s debt to determine what each spouse would pay.  So in the example, Spouse A holds 25% of the loans and so would have a payment of 25% of the total ($161) and Spouse B would hold 75% of the loans and would thus pay 75% of the total ($485).  Are my formulas correct? This will help me decide if I should switch my husband over to IBR too - perhaps if we save on his payment, we could apply the remainder of what he was paying toward mine, making the remaining portion manageable for me without increasing his overall student loan payment budget (which is maxed out). 

4.  This begs another question though…. I am wondering if he would even qualify for IBR - by himself with just his AGI, he would not (his 10-year payment would be less than his IBR payment)...  But with my info included and using the formulas above, I calculated his IBR payment would be way less than his 10-year payment…  So does this mean he qualifies?

Sigh, all in all, this is way to complicated.  I would much prefer if they used paystubs or W2s to verify income every year and only counted an individual’s income, instead of using both and a ratio.  This seems like a really unfair system for married couples.

For questions number 3 and 4 use the IBR calculator.  http://studentaid.ed.gov/repay-loans/understand/plans/income-based/calculator.  You should also possibly explore filing separately.

The rules are definitely annoying.  We’ve addressed both the married issues and the switching repayment plan issues in this thread: http://askheatherjarvis.com/blog/pay-as-you-earn-hotter-than-IBR

Check that out and if you have follow up questions just let us know!