My wife is graduating from grad school in June of 2026. She has over six figures of high interest unsubsidized loans. We already filed our taxes married filing jointly for 2025. She may be able to be eligible for PSLF but definitely eligible for IBR. We would appreciate any and all help with the following questions:
1. Which of the following statements about initial IBR/PSLF payments is true:
- A: Her initial payments will be based on our joint 2025 income (essentially mine because she didn't make $ in 2025).
- B: Her initial payments will be based on her estimated yearly income for 2026, which would only be about four months since she starts work in August (we plan to file MFS). We need to provide paystubs.
- C: Her initial payments will be based on her estimated income for 2027 (we plan to file MFS).
- D: Her initial payments will be based on a combo of the above (if so, _______).
- E: Some secret, fifth answer!
2. After her grace period ends December 2026:
- A: All the interest she accrued from the start of her loans until December 2026 capitalizes.
- B: All the interest she accrued from the start of the grace period until December 2026 capitalizes.
- C: Some secret, third answer!
3. Is it worth it to try and pay the interest so it doesn't capitalize?
- A: Yes, because having a lower principal starting in December 2026 is good!
- B: No, because you'll save more letting it capitalize and only making the monthly payments once they begin (it's getting forgiven after 10-20 years).
- C: Some secret, third answer!
4. Speaking of interest, we are still w/in 120 days of the last disbursement. If we pay now, all that $ goes to the principal and any interest accrued on the $ we pay off is destroyed. Ex not using real #s: if we pay, say $1500, it would effectively erase $1525 (principal + interest accrued on $1500 over the days).
- A: This is not worth it. It's only $25 and it'll be forgiven.
- B: This is worth it. It's more bang for your buck.
5. Let's say we have a kid down the road. We should:
- A: Immediately recertify the payment plan as it will lower.
- B: Not do that.
6. To lower the monthly minimum, we should try and put as much $$$ into her 401K as possible. We should put future kids on her insurance plans. We should put the kids as her dependents when married filing separately.
- A: Do all of those and also _____
- B: Do some of those like ______ but don't do _____.
- C: Do none of those!
- D: Some other secret answer ____
7. If PSLF is not available and we do IBR, we should calculate the tax bomb and:
- A: Start saving up in a HYSA.
- B: Start putting money into safe-ish stocks.
- C: Put the money on black.
- D: Don't worry about it until closer to the 20 years.
- E: Mix of the above or ______.
I suspect the answers are B or E, A, B, A, A, B, E. Let me know how terribly off I am!
We will be providing smiley stickers for a great quiz result (upon loan forgiveness).
EXTRA CREDIT: What important questions are we not thinking of?
Multiple Choice Quiz: are my wife and I's student loan assumptions: A. Terrible! B. OK with some tweaks or C. GREAT!
byu/abefrost inStudentLoans
Posted by abefrost
3 Comments
PSLF is a mechanism for forgiveness. It requires being on an income driven repayment plan practically speaking. IDR plans base monthly payment amounts based on house hold size and income. Spousal income can be excluded from consideration if taxes are filed separately. If one certifies using pay stubs, gross income will be used. If one certifies using tax returns AGI will be used.
AGI can be lowered by making HSA/FSA/401k/403b etc contributions.
Leaving in school deferment is no longer an interest capitalizing event.
Filing jointly makes the IDR payment be based on both of your incomes. You can file separately next time if you want payments to be based on just the spouse’s income.
You are encouraged to use the tax-advantaged accounts since it has the double benefit of reducing your payments and reducing tax burden.
PSLF is its own program, it will be available, but whether you will qualify is something you will have to determine.
If you get PSLF forgiveness you do not have to plan for the tax bomb since it is not taxable. Regular IDR forgiveness is taxable though, with only limited exclusions.
You need to do more reading about how IDR and PSLF work.
Answering these questions will not given you the understanding as to why people recommend A. B. C. D.
There is much more nuance to how these programs work and how they work for your family.