How Switching Your Student Loan Forgiveness Plan Can Save You Thousands of Dollars!

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How would you like to save thousands of dollars a year, simply by switching the loan forgiveness program you are on? We know we did! A recent conversation with Travis Hornsby of Student Loan Planner informed us that we could speed up our loan repayment simply by switching from IBR to REPAYE! The information that Travis shared with us was so valuable, because it could in fact save us thousands of dollars on our student loans! That’s equivalent to refinancing to a lower rate, thus cutting down our repayment timeline, while still allowing us the safety net of being in a loan forgiveness program. After conversing with Travis for an hour, I would highly recommend Student Loan Planner as the starting point for any student or new grad looking for student debt advice.

So how do we save $$$ this year? It’s simple. All we need to do is to switch from IBR to REPAYE. Today, I will outline why.

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A Case Study: IBR VS REPAYE

We were under the IBR program since we embarked on this journey to repay our student debt of $574,000. Before you consider which loan forgiveness program you want to choose, you should probably read Finance: Student Loan Forgiveness Options: IBR VS PAYE VS REPAYE. We had initially chosen IBR despite the fact that the monthly payments would be 15% of discretionary income vs REPAYE’s 10% of discretionary income because of this one factor: IBR allows you to file taxes separately as a married couple and it will only consider the loan holder’s income, versus REPAYE which will consider the income of your spouse as well. Since Mr. Debtist also makes a six figure number, we figure that we would have the better deal using solely my income.

Here is an example of how to calculate that:

Let’s use estimates from our personal story to calculate the difference.

Assume that our loan is an even $550,000, my income (the debt holder) is $125,000 and Mr. Debtist’s income is $120,000.

Under IBR, they would calculate our yearly loan payment by multiplying my income by 15%.

125,000 * 0.15 = 18,750

Now we divide that by 12 months to find the monthly payment.

18,750 / 12 = 1,562.50

Therefore our monthly payment would be $1,562.50 under IBR.

Under REPAYE, we need to use the total household income of $245,000 to calculate the yearly payment, however we will only be paying 10% of our household income.

(245,000 – 1.5 * 16,460) * 0.10 = 22,030.85

To find the monthly payment, divide by 12 months.

22,030.85 / 12 = 1,835.90

Therefore our monthly payment would be $1,835 under REPAYE.

As you can see from this example, IBR would be the better payment plan because you would be paying the cheapest amount per month and allowing the program to forgive as much as possible.

HOWEVER, there is a rule with REPAYE that IBR does not have. REPAYE will subsidize 100% of the interest accrued for the first three years for subsidized loans, and 50% of the interest accrued after the first three years, which changes the game. Note, if you have unsubsidized loans or GRAD PLUS loans, they will only pay 50% of the interest accrued, period. Let’s see how.

Under REPAYE, the government will subsidize the interest that does not get covered by your minimum payment. In my case, I took out GRAD PLUS loans, so that would be 50% of the interest that accrues. We have already calculated the monthly payment to be $1,835.90. Let’s convert that to yearly payments.

$1,835.90 * 12 months =  $22,030.85 owed this year under REPAYE

This year, based on last year’s income, we owe $22,030.85 in total payments under REPAYE. We also know that interest on $550,000 at 7% is $38,500. Therefore, our payments under REPAYE are not even enough to cover interest, as is usually the case with a loan this large.

So the difference is calculated as follows:

$38,500 – $22,030.85= $16,469.15 * 0.5 = $8,234.58

Which means that for our case, the government will subsidize over $8k per year! You would be missing out on thousands of dollars just by being on the wrong program! We certainly did.

Why We Stuck with IBR in the past

We decided to be under IBR right when I got out of dental school, BEFORE we decided to pay back our loans aggressively. The reason being in my first year, I only worked for the last three months of the year, having waited for my license to be approved after graduating in June. In my first year’s taxes, I made $25,000. So taking 15% of $25,000 would be cheaper than 10% of $145,000. Now in the second year, the numbers completely changed since I started working full time for the entire twelve months. My salary jumped from $25,000 to $125,000. The ultimate question: Why didn’t we make the switch?

In April of my first full year of work, we had decided to pay back the loans aggressively. Meaning, our monthly payments were MORE THAN the minimum amount required. In order for there to be excess interest accrued on the loan, our monthly payments should not exceed the interest gained, which was about $3,000. But since we were paying our debt like CRAZY, we were actually paying $6,500 towards the loans, so no interest was accruing and it did not matter if we stayed in IBR or went to REPAYE.

Or so we thought…

We were VERY wrong!

A Common Misconception

According to Travis Hornsby of Student Loan Planner, REPAYE calculates the difference between the interest accrued and the amount paid back on the loan at the beginning of the year. REPAYE assumes that you will only make your minimal payment each month, which means that they lock in the assumption that $11,500 would be accruing in interest (for our particular example). Every month, they will subsidize a portion of your loan to make up for the interest that will supposedly accrue, REGARDLESS OF THE MONTHLY PAYMENT YOU ACTUALLY PAY. It doesn’t matter if we pay $6,500 towards the loans or if we pay the minimum amount. Either way, REPAYE will subsidize the difference between the minimum payment and the interest that’s being charged. So we have actually missed out on an opportunity here! What’s passed is past, but we are definitely jumping from IBR to REPAYE ASAP!

What Switching from IBR to REPAYE will save us.

We need to make this jump because of the following:

  • It will save us tens of thousands of dollars in the long run.
  • Making the change will be the equivalent of refinancing to a lower rate without actually having to refinance! Which then gives us the safety net of staying in a loan forgiveness program. If ever life throws us a curveball (such as an accident, layoff, disability, sickness, or our worlds fall into chaos and we cannot work), then the loan forgiveness program will give us the flexibility to not HAVE to pay $6,500 per month.
  • After all the money we save, we can cut our repayment timeline down to 7.5 years!

Off course, not everyone under IBR should automatically jump to REPAYE! You have to pick the financial path that is right for you, considering your personality, your goals, your lifestyle, and more. If you are looking for sound advice on how to create a student loan repayment plan customized for your situation, don’t hesitate to contact Travis Hornsby, founder of Student Loan Planner, using my affiliate link. It will be a very rewarding hour! And check out my second podcast episode with Travis, to be released in 2019! Stay tuned.

Finance: When NOT to consolidate student loans

There was a day last year when Mike, two co-workers, and I all took the day off of work, just because. I remember it vividly. It was a Tuesday and the weather was sunny, and somewhere in the low eighties. Mike and his co-workers came over to our place to work one of his motorcycles. The goal was to change the engine, but I think the boys really just wanted to take it apart and put it back together like a box of legos. Such are the interests of engineers who design electric cars all day. I did my own thing, cooking and writing, and biking, etc. The usual. Once in a while, I popped my head in the garage to watch them tinker, to observe the progress. There were times where they struggled, muscling their way into making pieces fit. Other times, they laughed, at some overlooked rookie mistake of theirs. Most of the time they were either marveling at the mechanics of it all, or otherwise criticizing some faulty housing of electric wires. I guess inefficiencies of mechanical parts are laughable, to some. Overall, they did good. The bike ran, after twelve hours of work, sweat, and metaphorical tears.

At the end of the day, we ate a much deserved dinner of Mediterranean food. As we were talking about who knows what, the topic of student loans came up. It was actually brought up by one of Mike’s co-workers who happened to be dating a pharmacist. He was the one who inspired me to write the previous blog post, and it is because of stories like these that I am determined to share whatever little knowledge I have of finances with the rest of the world.

His girlfriend was pursuing an alternative loan forgiveness program to pay her student loans from pharmacy school. As part of the Public Service Loan Forgiveness Program, she has been working for the past two years at a VA hospital in LA county. The program states that after ten years of service at a government or not-for-profit organization, the loans will be wiped, TAX FREE (compared to the IBR, PAYE and REPAYE options which considers forgiven amounts as part of your income and is therefore taxed). She has been working here for a few years and was warned against consolidating her loans by her co-workers. Why?

She had some co-workers who have been working at the hospital for a few years. The hospital started to convince them to consolidate their loans. They said consolidating multiple loans into one will be more convenient and easier to track. Some of them went ahead and did just that, after listening to the hospital’s advice. Unfortunately, there is a clause that states that after consolidation of student loans, previous payments do not count towards the loan repayment program. In other words, despite having worked for 2 out of the required 10 years, after consolidation of the loans, the previous 2 years no longer counted towards the 10 year loan repayment. The consolidated loan is now considered a completely different loan, and in order to have that loan forgiven, they will have to work for an additional ten years. It was a story enough to make one cry. Imagine working your way towards freedom, only to have that freedom taken away and prolonged. The past two years of hard work went towards nothing. The worst part? They were advised to do this! Off course, it is not the hospital’s responsibility to be aware of the clauses associated with every loan program, so we can’t entirely blame the hospital. I just wish there was a positive end result from the decision to consolidate, which there wasn’t. All for “convenience” of having one lump sum, instead of keeping track of a few different loans.

Moral of the story: Do not consolidate your loans if you have already started a Public Service Loan Forgiveness program. If you would like to consolidate your loans, please do this right out of school, prior to working for your not-for-profit or government organization. My heart seriously goes out to those who have discovered this clause the difficult way. I am just glad that our friend’s girlfriend learned of it before she herself was convinced to do the same.

In line with all other aspects of this blog, freedom supersedes convenience in my book, always. Freedom to call your own schedule. Freedom to take the day off with your friends whenever you want. Freedom to enjoy hobbies, learn new things, and work on motorcycles. Even if it means avoiding the conveniences. 

Finance: Student Loan Forgiveness Options: IBR VS PAYE VS REPAYE

I remember the days leading up to graduating dental school. I had an incurable case of senioritis, and I was ready to go. I had reached all my requirements with a few months to spare. It was just a matter of time. It wasn’t school itself that was on my mind. All I could think about at that point was the student debt that I knew I had to face once I got out.

I recall that every student at USC’s dental program was required to take an exit course that went over student loan repayment options. They called it a course to make it sound official, but it was literally a one hour power-point presentation in a small classroom with mostly empty seats. I remember sitting towards the front of the classroom, with a notepad and pen, and furiously scribbling notes throughout the entire thing. Meanwhile, classmates grumbled about what a waste of time this was. Some tardily strolled in, halfway through the presentation, just so they can sign the sign out sheets. Those that did come on time sat, and politely listened, but without a pen in hand, sitting back casually until the presenter announced the end. At that time, I thought that I was the only one who did not understand this stuff. It seemed like either everyone either had rich parents, or had a plan. I remember kicking myself for not studying this before, since my classmates appeared bored at best, presumably because they already knew the ins and outs of their loan repayment plans. There was only one other classmate, a boy, who was taking notes with me. I remember him vividly, though we never talked before, because he asked tons of questions that I was too afraid to ask. I also remember him because after the class, the speaker offered to do additional mini-lectures if we had questions. He was the only other person I saw pursue this topic as avidly as I in the upcoming weeks before graduation. I would come in for a one-on-one meeting with the financial advisor, and after I walked out, he would walk in. Or vice versa. We had meetings with the malpractice representative twice, and for disability insurance once more, after the required one. We were the only two students in the classroom during these meetings. He and I sat next to each other at the front of the room, taking notes and writing down numbers and calculations. I must have seen him on 7 different days outside of the required exit course. I never spoke to him, not once. I don’t even remember his name, although we were in the same class. I wish I did so I can hit him up and ask how his path to repayment is going. Meanwhile, I thought everyone else had it all figured out. But I was wrong.

I was so obsessed (afraid? aware?) of the student debt’s debilitating ability to control my life that I even had Mike sit in on some of the meetings. This was around the time we had talked about getting married, and I realized that now my decisions will start to affect someone that I cared about. I wanted him to a) know what he was getting into because once you’re married, you share EVERYTHING and b) not be extremely affected by the loan I was bringing in. I felt a lot of guilt, and it was the first time in my life that I realized that my misguided financial choices will impact a loved one’s lifestyle for a long period of time. I knew I had to get out. I went through projections and extrapolations and Excel sheets with counselors. Then I scheduled an appointment with Mike in order to go over the same spreadsheets and Excel sheets again (because they won’t allow you to take a copy of the real numbers home…). We are numbers people, and I had to have him see the numbers. I remember coming home to late night discussions about our “game plan”. I remember feeling trapped, and slightly depressed, that I could not find a short term solution for this. I got out of dental school and picked up just about every possible side hustle I could muster while waiting for my license in the mail. Before I even started work, I reached out to a CFP because I felt that I needed help. I didn’t know the ins and outs of finances as well as I would hope, and I wanted to make sure that we were doing everything correctly. The one thing I did know was that the only thing on our side was time. The sooner I addressed my financial problems, the less of a burden they will be in the future. I wanted to cut off all compounding problems (read as interests), nip them in the bud persay, before the weeds could grow thorns.

Throughout this entire process, all anyone would say (when I was bold enough to ask them about their repayment plan) was that they were going with the student loan repayment route. In parrot-like manner, almost. Surely, when the exit course was being taught at USC, it was implied that the student loan repayment plan is the way to go. It was the YOLOs of all YOLOs. You only pay a small percentage of your paycheck, for 20-25 years, and then your loan is forgiven after that. Have fun now, enjoy life while you are young, and worry about the debt later. I always felt in my heart that that could not have been the best option. But everyone I talked to at the beginning of our journey said that my loan was too large to realistically pay down the debt in a standard way, unless I was some baller G who landed a five star practice that I owned for myself. I mean, I understand why. A standard repayment required a $6000 check being sent to My Great Lakes, every month for 10 years. That is 120 consecutive payments of $6000. It’s a huge pill to swallow. Mike didn’t believe we could do it given the numbers. Even my financial planner, who first looked at our finances in September, said that it can’t be done according to our current financial situation. (Eventually, we did get to a point where it could be done, but I will save that for a future post). So at the beginning of our journey, everyone we consulted with said we had to choose between the following three student loan repayment options: IBR, PAYE, or REPAYE.

I chose one and then entered the real world, where I learned, that most people who graduated from college did not even have an exit course and have absolutely no idea what they are doing with their student loans. I have talked to numerous professionals, and there has been many instances where they asked a question regarding a fundamental aspect of their loan program because they just didn’t have the answer. I have dentists who have been out 3, 5, 10 years, asking me questions about loans. I am no expert at this stuff, just to clarify, but I did study it for a fair amount of time. I have been thinking about writing this post for a while, but it wasn’t until Mike’s co-worker was talking to Mike one day and said, “You know what Sam should write about on her blog? All the Student Loan Forgiveness options and their clauses. Because no one seems to understand this shit.” His girlfriend is a pharmacist working for the past two years under a Public Service Loan Forgiveness Program, and she says her colleagues have made some major mistakes that have screwed their financial plan significantly. More on that at a later post as well. The take away message here is that, maybe no one actually knew what they were doing as the graduating days neared us. I sure didn’t. I was so unsure about my options that I felt the need to hire a financial planner just to get things straight. Maybe no one still knows. And when it was outwardly voiced that there is a need for this post, then that’s what motivated me to sit down and write it. Additionally, I will walk you through our decision tree, to give you some insight as to why one of these was the option we chose. Please understand that our decision tree does not necessarily predict your own decision tree. It is only meant to show the thought process through which we reached a final decision.

When we went through the student loan exit course, there were numerous slides on that PowerPoint that, in my opinion, were haphazardly organized. As a visual person, here is the best way I could organize this information. There are three options currently, IBR, PAYE, and REPAYE. The following are the differences between the three programs.

IBR VS PAYE VS REPAYE

  IBR PAYE REPAYE
Eligible Loans -All federal Family Education Loan Program, Stafford and Grad Plus Loans

-All FFELP and direct loan consolidation loans that do not contain parent PLUS Loans

-All Stafford loans or Grad Plus Loans disbursed on or after October 1, 2011.
-Consolidation loans made on or after October 1, 2011, unless they contain a direct loan or FFEL loan made before October 1, 2007, or a Parent PLUS loan.

-Direct loan borrowers without loans prior to October 1, 2007 who also had a disbursement made on or after October 1, 2011.

-Any Stafford/Grad Plus Loan

-Any direct consolidation loan that does not contain Parent PLUS loan.

Eligibility -Payments under a 10 year term must be higher than what they would be under IBR. -Payments under a 10-year term must be higher than what they would be under REPAYE. -No payment amount limit.
Monthly Payment 15% of discretionary income. The maximum is what you’d pay under a 10 year loan. 10% of discretionary income. 10% of discretionary income.
Married Borrowers -If filing joint tax returns, both spouses’ incomes and eligible debt is considered.

-If filing separate tax returns, only the applicant’s income and eligible debt is considered.

– If filing joint tax returns, both spouses’ incomes and eligible debt is considered.

-If filing separate tax returns, only the applicant’s income and eligible debt is considered.

– Both spouses’ income and federal student loan debt, if applicable, is considered regardless of filing status.

-Exception for victims of domestic violence or if borrower is separated from spouse.

Interest Capitalization When calculated, payment is equal to or greater than what it would be under the 10 year term and/or when the borrower leaves IBR. When calculated, payment is equal to or greater than what it would be under the 10 year term and/or when the borrower leaves PAYE. As there is no maximum payment, interest will only be capitalized once they leave REPAYE.
Forgiveness Any remaining balance after 25 years of eligible payments is forgiven and taxed as income. Only payments made on or after July 1, 2009 are eligible. Any remaining balance after 20 years of eligible payments is forgiven and taxed as income. Only payments made on or after July 1, 2009 are eligible. Borrowers with undergrad loans only will receive forgiveness after 20 years of eligible payments. Those with graduate loans will receive forgiveness after 25 years of eligible payments. Forgiven amount will be taxed as income.

THE SIMILARITIES

The following are requirements that apply to all three loan forgiveness options:

  • Discretionary income is adjusted gross income minus 150% of state poverty level for the borrower’s family size.
  • Loans cannot be in default.
  • Minimum monthly payments can be as low as $0 per month. For example, if you are currently not working due to disability or maternity leave, you pay a percentage of your income, which is $0.
  • If payment does not satisfy monthly accrued interest, the Department of Education pays the remained for most subsidized Stafford loans for up to 3 years. For REPAYE only, the agency also will pay 50% of unpaid interest on unsubsidized loans.
  • Like IBR/REPAYE, payments under REPAYE count toward public service loan forgiveness. If your loan is under FFEL program, you need to consolidate in order to get REPAYE.

INSIGHTS

  • No Parent PLUS Loans: First thing is first. You’ve got to figure out which student loans you’ve taken out. Once you have that figured out, you can decide which loan repayment programs you qualify for. It is important to note that none of these loan forgiveness programs allow Parent PLUS loans. If you are going to consolidate your loans, you have to make sure that none of the loans that were consolidated are part of a Parent PLUS loan, otherwise, you immediately disqualify yourself from the loan forgiveness programs.
  • October 1, 2011 is the cut off for PAYE. If you have taken out loans prior to this date, you will not qualify for PAYE.
  • Payments under a 10-year term must be higher than what they would be under IBR. But does it makes sense to do IBR? This is important if your loan amount is quite small. For example, if you have a loan of $150,000 (let’s say because you worked your butt off to minimize the student loan total) and you make $135,000/year as a dentist, a 10 year repayment plan will have you paying $1718.52/month at a 6.7% interest rate for 10 years. Compare that to IBR where you pay $1687.50/month at the same interest rate for 25 years. Technically, in this example, you will still qualify for IBR, because your 10-year term payments are still higher than IBR payments. But is it worth it? To me, it would make sense to just stick with standard repayment and get rid of the debt in 10 years, rather than prolonging it for 25 years, especially since you pay about the same monthly payment. The shortened debt time will decrease the total money you end up paying, because it decreases the amount you pay in interest. Plus, you will no longer have the debt hanging over your head. Compare that to a dentist who makes the same amount of money per year, but who has a loan debt of $550,000. Now the month difference is $6500/month vs $1687.50/month. IBR works well if you have a huge loan and cannot make the atrocious monthly payment fit with your ideal lifestyle. For smaller loan amounts, it may be best to just stick with standard repayment.
  • Smaller monthly payments: A good thing or a bad thing? When looking at these programs with a short term mindset, it is easy to think that smaller monthly payments are better than larger monthly payments. However, may I point out that small monthly payments for a large loan may not be enough to pay down the interest at all. For example, with a loan of $550,000, the interest that accrues each month at 6.7% interest rate is about $3,200/month. However, as from the previous example, 15% of a $135,000 yearly gross income is $1687. So every month, you are only paying half of the accruing interest, which means that interest will continually add to your loan total. Over twenty five years, you are increasing your total amount under the IBR program. Because of this, your total loan amount at the end of 25 years will be over $1 million dollars. But that’s alright, because it will all be wiped in the end anyways, right? (PS: In order to equal the accruing interest rate, without even touching the principal balance ever, you would need to be making more than $300,000 / year. Yikes.)
  • Consider your spouse’s income. It is important to note that under REPAYE, your spouse’s income counts as part of the discretionary income. Depending on your spouse’s income, this can increase your monthly loan payments, which will actually increase the amount you pay long term.
  • Forgiven amounts are taxed. This is a crucial part of the clause for the loan forgiveness programs. Those who miss this will be shocked at the end of the 25 years. I actually have met colleagues who have been graduated 3 and 5 years who are not aware of this rule. When I told them that the forgiven amounts will be taxed, their jaws dropped. Why? Because none of them knew. This single rule is what made me question whether loan forgiveness was worth it. As mentioned before, under IBR, with a loan as large as $550k, after twenty five years of payment from a dentist with $135,000 income, you would end up with over one million dollars in debt. I think my number was closer to $1,200,000. This was calculated with the assumption that I would be increasing my salary to more than $135,000 as I increased my experience. Either way, at year 25, the loans will be forgiven, and the total amount forgiven will be considered income that you made that year, and will be taxed similarly. So at the end of 25 years, I was expected to pay north of $350,000, in one lump sum, on top of taxes of the income I made on that year. Unless you have a plan to be swimming in some serious dough in twenty five years, I would say it would be advisable to save up for that $350,000 over 25 years. So that’s an additional $1,166 every month you have to save. But what bothered me most was the total amount of money you would pay after loan forgiveness. It turns out, with the taxed income, you would pay more money than the standard repayment. Standard repayment will lead to a total of $720,000 going towards loans, whereas IBR will lead to a grand total of $856,250. Plus, you would have a loan hanging over your head for 25 years, instead of only 10 years (less than half the amount of time). The time may not seem such a big deal, but that is a very large psychological strain to put on yourself for a very long amount of time. Let’s say you were ahead of your class and graduated dental school at 25. This loan would be with you until you’re 50 years old. That’s a really long time.
  • There is no clause stating that you are guaranteed to be grandfathered in the loan forgiveness program. While I would love to believe that we will all be one hundred percent grandfathered into these programs, we must not be in denial, and agree to the fact that there is no such clause that guarantees this to be the case. This program may be subject to future changes with changes in government. 25 years is a very long time, and the government changes can occur in a short time span within those 25 years. For example, what if a law passes that changes the loan forgiveness program from being 25 years to 30 years? What if you were so far in, that all you’ve done the last twenty years was increase your loan to a point of no return? You would then have to go through with the additional five years, thus increasing your loan total even more, which then increases the final amount you’ve paid for your education. Or what if the programs are abolished completely? Perhaps you would get some help, perhaps you would be grandfathered in, but perhaps they do nothing to help you, leaving you with over a million dollars’ worth of debt in your forties that you must now pay off. People may say, that’s crazy, they can’t do that to us! Unfortunately, until I see a statement saying otherwise, I will continue to believe that anything can happen. That may just be me, being overly cautious. Or realistic, whichever.

APPLICATION: OUR DECISION TREE

So which program did we choose? As I stated before, initially, we were told that this was the way to go, so we decided to choose one category to fall under. Unfortunately, we immediately had to eliminate PAYE because I had student loans that were disbursed before October of 2011, which were my undergraduate loans. So we were down to either IBR or REPAYE. Both will take 25 years before the student loans were forgiven. It may seem as if REPAYE would be the best option, because it only requires 10% of discretionary income to be paid, whereas IBR requires 15% of discretionary income to be paid. However, we chose IBR over REPAYE because of the married borrowers section of the chart. IBR allows Mike and me to file separately, which means Mike’s income is not calculated in that 15%. Whereas REPAYE will calculate Mike’s income into the 10% owed every year, regardless of our filing status. This fact alone makes a huge difference in how much we end up paying. Without giving away the actual numbers, the example below will demonstrate this point. Under IBR, a combined income of $200,000 will yield a $2,500 check per month being written towards student loans, whereas a single income of $100,000 will yield a $1,250 check per month towards student loans. One may argue that it is better to pay down a higher portion of the loans so that at the end of the 25 years, the amount left over that you will be taxed on is less. However, if you choose to do the loan forgiveness program, it will actually benefit you most if you pay the least amount possible. Your total payment will be less in the long run. Notice how filing together will require $2,500 per month to be paid towards your loans, which is still not enough to cover the accruing interest. So even with the increased amount you are paying, the loan total will still be increasing. The numbers ended up showing that it would be better to pay taxes on a slightly larger number, than it is to pay twice as much every month without ever even touching principle. Off course, this is of the assumption that your spouse and you make the same income for work. In order to check what works best for your situation, I would recommend running your own numbers, using your loan amounts and your incomes.

I would like to reiterate that I am no expert. I can’t tell you which plan is better for you, and it is highly likely that I don’t know all the ins and outs of all three plans. But this is what I’ve learned so far, and our method of thinking. If there are ever any doubts, just run projections and calculations and excel sheets, and go with the numbers. The numbers won’t lie. I hope this has been helpful to some, and I hope more people realize the importance of thinking about this early on in their careers after reading this post. If you ever need someone to walk you through it, may I recommend a CFP? I wish you the best of luck in your endeavors, and more future insightful posts on finance to come!