student loan advice for couple

**jIM_Ohio** · 09-15-2010, 10:59 AM

I would NOT pay down her loans until after you are married
If she received a gift, pay down that 7% loan for sure.

**littleroc02us** · 09-15-2010, 11:31 AM

My wife and I waited until we were married and then we took some money out of her money market and paid them all off. I would take the 30k and take care of the 20k one first and then apply 10k towards the 35k. You will only have 2 loans left and if will pschologically feel like you are getting more accomplished. Imagine for a moment if you take the 30k and put it towards the 55k, it doesn't seems like you've done hardly anything. It's all in your mind. Then she needs to get a job of whatever sort and start paying off the others.

**Slug** · 09-15-2010, 12:54 PM

I would calculate the income tax benefits of getting married vs. the loan forgiveness she could get in 25 years. Assuming another person's $110k worth of debt just for a legal piece of paper. If you're together, you're together and the ceremony and marriage certificate are really just unnecessary costs to incur. Reading my response, I realize it is highly un-romantic, but if I were in your situation, these are the kinds of considerations I would be making.

**Seeker** · 09-15-2010, 11:42 PM

Originally posted by minijack123 View Post

Hi,

My girlfriend of 6 years and I have just finished school and I need some advice on student loans. Due to my program I finished my graduate degree with zero debt but my girlfriend had to take out loans for her graduate program. Unfortunately her profession (architecture) has taken a huge hit and she is having trouble finding a job now and is on the IBR program, limiting her payments to $150/mo (capped based on income, then balance is forgiven after 25 years). The loans are as follows:

55K @7%
35K @4.75%
20K @2.875

A family member has offered 30K to apply to the loans. Should this be applied to the highest interest?

I too would advise her to apply all 30k gifted monies, toward the highest interest rate debt.

If we get married (likely), our incomes will be combined and the IBR won't be helpful.

In order for IBR to not be effective as a married couple, she'd have to still not be making very much money, and you'd have to be making more than 120k alone (by my calculations, which may be wrong or outdated).

IBR is only for Federal Student Loans.

So some personal advice is appreciated -- should I start helping out and pay down these loans? I'm thinking of gifting 10K with her family members 30K this year...

Ideally we could pay down the 7% loan...should we not touch the lower rates? Those rates are low and inflation could pick back up in a few years...

thanks for the advice!!

I too would not advise you to pay down any part of her education debts before you are married. There's always a risk of separation, or even accident. With a Federal Student Loan, the debt would only be hers -- only the student who recieved that education is responsible for paying back that loan, not the SO. And if anything of that nature were to befall her, any payment of her student loans would cease-- marriage or not, it's a Federal Student Loan.

The higher interest loans incur more debt. Yes, inflation can come along, but inflation will likely hit all the loans, not just the lower interest rates. Either way, the satisfaction you get from entirely paying a small loan, IMHO, is soon wiped out when you realize that you've paid more monies for that satisfaction. My recommendation is to pay off the highest interest rate loans first and work your way down to the smaller. If the smaller interest rate rises above the current highest, then change then.

**Seeker** · 09-15-2010, 11:57 PM

Originally posted by Slug View Post

I would calculate the income tax benefits of getting married vs. the loan forgiveness she could get in 25 years. Assuming another person's $110k worth of debt just for a legal piece of paper. If you're together, you're together and the ceremony and marriage certificate are really just unnecessary costs to incur. Reading my response, I realize it is highly un-romantic, but if I were in your situation, these are the kinds of considerations I would be making.

Now, as for getting married or not, that's almost always a personal decision instead of a tax decision. Strictly from a tax perspective, getting married makes the most sense when one spouse earns income and the other spouse doesn't earn income. That because one income is being spread over two people, and the income is now tax at the more favorable Married Filing Joint tax rates, and the married couple can enjoy higher limitations on retirement savings and other tax benefits. Again, strictly from a tax perspective, staying single makes the most sense when both life-partners earn income. That's because you can use different tax strategies for each partner. For example, the person with the lower income can take advantage of various child-related tax benefits (head of household filing status, child tax credit, earned income credit), while the person with the higher income can take advantage of various income-related tax strategies (as I discussed above).

The above quote is from: Taxes and Getting Married - Questions from Readers

**feh** · 09-16-2010, 11:27 AM

Originally posted by littleroc02us View Post

My wife and I waited until we were married and then we took some money out of her money market and paid them all off. I would take the 30k and take care of the 20k one first and then apply 10k towards the 35k. You will only have 2 loans left and if will pschologically feel like you are getting more accomplished. Imagine for a moment if you take the 30k and put it towards the 55k, it doesn't seems like you've done hardly anything. It's all in your mind. Then she needs to get a job of whatever sort and start paying off the others.

The loans should be dealt with using cold, hard numbers, not psychology. Paying down the highest interest loan is obviously the best thing to do.

**DebbieL** · 09-17-2010, 10:05 AM

Originally posted by littleroc02us View Post

My wife and I waited until we were married and then we took some money out of her money market and paid them all off. I would take the 30k and take care of the 20k one first and then apply 10k towards the 35k. You will only have 2 loans left and if will pschologically feel like you are getting more accomplished. Imagine for a moment if you take the 30k and put it towards the 55k, it doesn't seems like you've done hardly anything. It's all in your mind. Then she needs to get a job of whatever sort and start paying off the others.

That is a bad plan. Pay off the 7% loan first. You are suggesting she pay off the loan with by far the lowest interest rate. Not a good idea. She will be far better off to tackle the 7% loan first.

**snshijuptr** · 09-23-2010, 10:57 AM

My opinion is that you are not ready to "gift" her money until you are ready to marry her. The commitment is exactly the same: sharing lifestyles, money, values, etc. If there is a reason holding you back from marrying her immediately, then that reason is good enough to keep you from giving her 10K. Put your money aside and save up to pay for a wedding, house, retirement, or any other life goal that you will share with her in the future and can benefit from without her.

Though my husband and I lived together for 2 years before we were engaged, it wasn't until the week after we were engaged that we began merging our money. Then over the next year wedding plans and money merging went hand-in-hand.

**shinobu** · 09-23-2010, 05:09 PM

Student Loan

If you get married and she is on the IBR program, file for taxes individually. It's only if you are married and filled taxes jointly, that it may not be helpful as both of your incomes would be considered when looking at IBR.

**mikebanker** · 09-25-2010, 07:52 AM

yes..put it toward the highest rate my friend.

student loan advice for couple