Hi! Me and my boyfriend are ready to go to the next step with marriage and he is concerned because I have about 92,000 in student loans. I have been on the IBR for about 3 years now and I am aware of the 25 year forgiveness. Last year I only made about 17000 and this year will be about the same or less. Because of my career right now I do not expect my income to change much from this for at least a few more years. Is there something else I should consider? How will my debt affect him? Is there a worst case scenario that I have overlooked beside the interest continuing to get higher? Should I consolidate?

Thank you!

I guess a lot of it depends….are your loans federal loans or private loans? If Federal, are they Direct loans? The 25 year forgiveness is not ideal because the way that it is set up now, anything forgiven is considered taxable income….so if your loan balloons to 120,000 over 25 years, let’s say, and all that is forgiven, you’ll probably owe over a third of it to the IRS due immediately (bad news). This might change…as there seems to be a drive to make it tax free…but until it’s fixed it is not ideal….I’m in a similar situation with my debt. I’d recommend either going for the PSLF program (Public Service Loan Forgiveness, which only works if your loans are DIRECT) or doing everything you can to find a better paying job and work your way up to pay it off fast.

If they are Federal loans, then your debt should be yours solely and your soon-to-be spouse should not be affected. If they are Private loans, or if you live in a community-proper state, then that might change things a bit….Find out what type of loans you have, and google search how your loans might affect your spouse.

I suggest PSLF because it IS tax free, and only 10 years. You have to be working in a qualifying place of employment (non profit, 501 c3, for example). Most schools count, as well as other non profit organizations. If you have federal loans that are NOT direct loans, you are allowed to consolidate them into a Direct Consolidation loan, so it will count. As soon as you submit paperwork stating that you are interested in PSLF, all your qualifying loans will move to Fedloan Servicing, and they will tally up your payments. I STRONGLY advise that if you choose this route, that you monitor EVERYTHING. Record your phonecalls, send things in writing, etc. These servicers all have a problem with being sloppy, and unfortunately the burden is on the borrower to make sure everything is right….

Anyhow, if you decide to do PSLF, I’d get everything squared away now so that you know that your payments are counting. They have a handy Employment Certification form that you can submit to verify that they’ve counted your payments.  You don’t want to find out 10 years down the road that you were on the wrong repayment plan or some other BS like that, so act quickly if you decide you want to do this. Also, since there is no real way to ‘enroll’ in the program (you have to apply after 10 years), this is the closest thing to getting your account setup for PSLF so that if anything happens in congress, you’ll have a good chance at getting grandfathered in (I hope!). good luck!

Also, FYI if you are married and file jointly, your IBR payment might go up significantly because both of your incomes are used to determine the monthly amount. You can avoid this by filing married but separate, but you will lose out on a LOT of tax benefits….