Money What would you do? - Page 6

**DaFace** · 04:01 PM

My wife just finished up her master's degree, and now we're figuring out our strategy for retirement planning and getting rid of student loans. We've got a kind of weird decision to make, so I'm curious how the Planet's financial minds would tackle it.

The crux of the issue is that she will most likely be able to get up to $17,500 of her $25,000 in student loans forgiven in five years since she's 1) a special ed teacher and 2) in a low-income school. However, we'd more than likely be able to pay it off well before then if we really wanted to. So, in a nutshell, here's the decision (over-simplified to make the discussion simpler):

Option 1: Pay off $17,500 in loans over the course of about two years. Zero chance of anything happening with the government that would compromise this option. We'd pay about $1,200 in interest during that time, for a total "payout" of $18,700 or so.

Option 2: Let it sit there for five years, then apply for loan forgiveness. We'd have to cover all of the interest above the $17,500 during that time, which is worth somewhere around $7,500 over five years, but that would be the total payout - a "benefit" of around $11,200 to our bottom line. However, 1) you never know what the government will do with these programs with all the spending cuts that are coming and 2) it sucks to carry debt when you don't have to. Technically, it also requires that she keep teaching for five years, but I don't see that being an issue.

I know the way I'm leaning, but am just curious to know what the financial advisors of ChiefsPlanet (heh) have to say.

(And too bad R8ers isn't here.

)

patteeu · 08-23-2011, 06:04 AM

I voted pay it off because I wouldn't be that surprised if the forgiveness program was ended and because it would free your wife to work somewhere else (or not work) if she wants. If she's confident that she wants to stay in her current job for at least 5 years, it might be worth the gamble to let it ride and go for forgiveness.

The bottom line as far as I'm concerned is that a few thousand dollars over several years isn't worth it if your wife will feel trapped by it.

**DaFace** · 08-23-2011, 08:41 AM

Quote:

Originally Posted by patteeu

I voted pay it off because I wouldn't be that surprised if the forgiveness program was ended and because it would free your wife to work somewhere else (or not work) if she wants. If she's confident that she wants to stay in her current job for at least 5 years, it might be worth the gamble to let it ride and go for forgiveness.

The bottom line as far as I'm concerned is that a few thousand dollars over several years isn't worth it if your wife will feel trapped by it.

Current specific job? Maybe, maybe not. Current district (were almost all of the schools qualify)? Highly likely. In a surrounding district where they have schools that qualify? Almost a given.

**DaFace** · 08-26-2016, 07:14 AM

Five years later, loan forgiveness of $17,500 came through without a hitch. Glad we didn't pay it off earlier.

**Buehler445** · 08-26-2016, 07:38 AM

Quote:

Originally Posted by DaFace

Five years later, loan forgiveness of $17,500 came through without a hitch. Glad we didn't pay it off earlier.

Nice!

I'm pretty sure the wheels would fall off if you tried that in Kansas. Glad she got it done.

blake5676 · 08-26-2016, 07:45 AM

Quote:

Originally Posted by DaFace

Five years later, loan forgiveness of $17,500 came through without a hitch. Glad we didn't pay it off earlier.

Sweet!

We're in a little bit of the same conundrum ourselves right now. My wife is a prosecuting attorney. She paid off her private loans about 6 years ago, but still has about $60k in federal loans left over. She's 5 years into a 10 year public service student loan forgiveness program. Currently doing income base repayment and if nothing changed, she'd probably have about 40 of the 60k forgiven in another 5 years.

Problem is, we're married now, and starting in two months my income is going to count towards her income based repayment as well if we file out taxes jointly. So her monthly payment staying in the same program are gonna go from about $450 to $1100. She's not very happy.

It's a basic math equation, but some of the rules of each program are so ****ing confusing. Still trying to figure out our best option. Might end up doing married filing separately so her repayment stays based off her income only. But then we'll be giving up quite a few other tax breaks.

Bottom line...student loans are a bitch. Glad your plan worked out for you!

**DaFace** · 08-26-2016, 07:52 AM

Quote:

Originally Posted by Buehler445

Nice!

I'm pretty sure the wheels would fall off if you tried that in Kansas. Glad she got it done.

Eh, it's a federal program.

**DaFace** · 08-26-2016, 07:54 AM

Quote:

Originally Posted by blake5676

Sweet!

We're in a little bit of the same conundrum ourselves right now. My wife is a prosecuting attorney. She paid off her private loans about 6 years ago, but still has about $60k in federal loans left over. She's 5 years into a 10 year public service student loan forgiveness program. Currently doing income base repayment and if nothing changed, she'd probably have about 40 of the 60k forgiven in another 5 years.

Problem is, we're married now, and starting in two months my income is going to count towards her income based repayment as well if we file out taxes jointly. So her monthly payment staying in the same program are gonna go from about $450 to $1100. She's not very happy.

It's a basic math equation, but some of the rules of each program are so ****ing confusing. Still trying to figure out our best option. Might end up doing married filing separately so her repayment stays based off her income only. But then we'll be giving up quite a few other tax breaks.

Bottom line...student loans are a bitch. Glad your plan worked out for you!

Yeah, as you can tell from this thread, it was definitely a tough decision. Couple all of the long-term planning with a healthy dose of uncertainty, and something that seems fairly straightforward on the surface becomes essentially an investment decision. Glad it worked out, but even 24 hours ago I would have told you I was only 90% sure it would come through.

**Rain Man** · 08-26-2016, 09:04 AM

Quote:

Originally Posted by DaFace

Five years later, loan forgiveness of $17,500 came through without a hitch. Glad we didn't pay it off earlier.

Nice. You can use that money to buy a first-class ticket to a Chiefs game on the 50-yard line, and maybe even cover parking.

**DaFace** · 08-26-2016, 09:20 AM

And for the record now that I've read back through the thread:

1. We held the balance at $17,500 the entire time, so we got the entire chunk paid off.
2. No, teacher loan forgiveness isn't taxable.

**Buehler445** · 08-26-2016, 10:42 AM

Quote:

Originally Posted by DaFace

Eh, it's a federal program.

Kansas would find away to **** it up.

View Poll Results: What would you do?
Option 1: Pay it off and be done with it.	34	64.15%
Option 2: The benefit is worth the hassle. Pay the minimums and let Uncle Sam pay the rest in five years.	16	30.19%
Ask Gaz	3	5.66%
Voters: 53. You may not vote on this poll

08-22-2011, 03:52 PM
DaFace Kind of a mod Join Date: Aug 2005 Location: Donkey Land Casino cash: $1996899	What would you do? My wife just finished up her master's degree, and now we're figuring out our strategy for retirement planning and getting rid of student loans. We've got a kind of weird decision to make, so I'm curious how the Planet's financial minds would tackle it. The crux of the issue is that she will most likely be able to get up to $17,500 of her $25,000 in student loans forgiven in five years since she's 1) a special ed teacher and 2) in a low-income school. However, we'd more than likely be able to pay it off well before then if we really wanted to. So, in a nutshell, here's the decision (over-simplified to make the discussion simpler): Option 1: Pay off $17,500 in loans over the course of about two years. Zero chance of anything happening with the government that would compromise this option. We'd pay about $1,200 in interest during that time, for a total "payout" of $18,700 or so. Option 2: Let it sit there for five years, then apply for loan forgiveness. We'd have to cover all of the interest above the $17,500 during that time, which is worth somewhere around $7,500 over five years, but that would be the total payout - a "benefit" of around $11,200 to our bottom line. However, 1) you never know what the government will do with these programs with all the spending cuts that are coming and 2) it sucks to carry debt when you don't have to. Technically, it also requires that she keep teaching for five years, but I don't see that being an issue. I know the way I'm leaning, but am just curious to know what the financial advisors of ChiefsPlanet (heh) have to say. (And too bad R8ers isn't here. ) Last edited by DaFace; 08-22-2011 at 04:01 PM..
Posts: 51,810

08-23-2011, 06:04 AM	#76
patteeu The 23rd Pillar Join Date: Sep 2002 Casino cash: $10019237	I voted pay it off because I wouldn't be that surprised if the forgiveness program was ended and because it would free your wife to work somewhere else (or not work) if she wants. If she's confident that she wants to stay in her current job for at least 5 years, it might be worth the gamble to let it ride and go for forgiveness. The bottom line as far as I'm concerned is that a few thousand dollars over several years isn't worth it if your wife will feel trapped by it. __________________ “Boy, you all want power. God, I hope you never get it.” - Lindsay Graham
Posts: 110,871

08-26-2016, 07:14 AM	#78
DaFace Kind of a mod Join Date: Aug 2005 Location: Donkey Land Casino cash: $1996899	Five years later, loan forgiveness of $17,500 came through without a hitch. Glad we didn't pay it off earlier.
Posts: 51,810

08-26-2016, 09:20 AM	#84
DaFace Kind of a mod Join Date: Aug 2005 Location: Donkey Land Casino cash: $1996899	And for the record now that I've read back through the thread: 1. We held the balance at $17,500 the entire time, so we got the entire chunk paid off. 2. No, teacher loan forgiveness isn't taxable.
Posts: 51,810