Repayment Programs & Spousal Income Forum

[Anonymous User]

Current law student here--would prefer to stay anonymous because my current girlfriend frequents this site and don't want to out myself. If this is in the wrong forum, please feel free to change.

2L looking at graduating with less than 75k in debt, likely less than 50 thanks to a mix of scholarships, savings, + family help. My GF is currently in the application process and will likely attend a lower T-14 school with minimal to no scholarship. She doesn't have much savings + no family help, so she'll be paying close to sticker.

She isn't committed to big law, at least not yet, and potentially wants to do public interest. I am going to be going into BigLaw, at least in the short term, but I'd like to keep my options open.

Central Q: Do all, fed + law school, repayment programs for PI include spousal income? Meaning, if I am in BigLaw and she does public interest, she/we wouldn't be eligible for repayment programs since our combined income will be 6 figures, correct?

Follow-up Q: Are there any law couples out there that have dealt with this or similar concerns?

[dixiecupdrinking]

I am 99% sure that IBR lets you exclude spousal income as long as you file taxes separately. (And PSLF shouldn't depend on your spouse's job, just whether you are in qualifying employment.) This aspect of the program was going to be cut in Obama'a budget proposal last year, I think, so it's far from certain that it will remain.

[A. Nony Mouse]

I can't speak to law school programs, but the federal repayment plans currently count spousal income (for the purpose of calculating your payment) if you file jointly, and don't if you file separately. There are rumors that future revisions to PAYE etc. will eliminate this loophole and count spousal income regardless, but I don't know if or when that change will occur.

Personally, my husband and I filed separately so I had lower payments, until we moved to a community property state where we really can't. I'm not absolutely certain that in the grand scheme of things it saved a significant amount of money, because it increased my husband's taxes (though I'm also not sure that this wasn't due to what he was having taken out), but I preferred having a lower monthly payment (and I'm hoping to make it to PSLF, so have no incentive have a higher payment and am honestly fine with paying more in taxes than to the loans).

[BarbellDreams]

From what I understand IBR/PAYE have been reformed a few years back to include both incomes for purposes of paying BOTH of the married couple's loans. Meaning that if you owe 100K and your wife owes 100K and you both make 100K salaries you will be calculated as a 200K household income for purposes of IBR/PAYE but thats 15/10% will be applied to BOTH loans.

The only way you really benefit by filing separately is if one of you has no loans or very little in loans.

[A. Nony Mouse]

You're right - I blanked on the "both have loans" part. My husband doesn't have loans, so my situation isn't quite analogous. Sorry, OP.

[wildhaggis]

From what I understand IBR/PAYE have been reformed a few years back to include both incomes for purposes of paying BOTH of the married couple's loans. Meaning that if you owe 100K and your wife owes 100K and you both make 100K salaries you will be calculated as a 200K household income for purposes of IBR/PAYE but thats 15/10% will be applied to BOTH loans.

The only way you really benefit by filing separately is if one of you has no loans or very little in loans.

So if both spouses have significant debt with relatively modest incomes (i.e. $50k each), getting married is guaranteed to fuck you if you are on IBR/PAYE? Even if filing separately?

Or did I just completely misread this post?

[SoCalTacos]

Chicago LRAP does not take spousal income into account.

[Tiago Splitter]

From what I understand IBR/PAYE have been reformed a few years back to include both incomes for purposes of paying BOTH of the married couple's loans. Meaning that if you owe 100K and your wife owes 100K and you both make 100K salaries you will be calculated as a 200K household income for purposes of IBR/PAYE but thats 15/10% will be applied to BOTH loans.

The only way you really benefit by filing separately is if one of you has no loans or very little in loans.

So if both spouses have significant debt with relatively modest incomes (i.e. $50k each), getting married is guaranteed to fuck you if you are on IBR/PAYE? Even if filing separately?

Or did I just completely misread this post?

It won't make much difference. Instead of making you each pay 10% of your 50k income above the poverty level, they'd make your household pay 10% of its 100k income above the poverty level. The poverty level goes up but won't double, so you will pay more after getting married, but it's not in guaranteed to fuck you territory. The exact amounts each will owe is based on the relative debt each partner has. So if one person has 100k and the other 200k the one with 200k will be obligated to cover 2/3 of the payments.