The Public Service Loan Forgiveness program was created to help those who work in nonprofit and public service careers with their student loan debt. To qualify for the program, borrowers must make 120 eligible payments on their student loans while enrolled in an income-driven repayment (IDR) plan and employed in a qualifying job. For borrowers with student loan debt from undergraduate and/or graduate school, the forgiven amount can be a life-changing financial boon—and well deserved, especially with the program’s strict qualifications.
But let’s say you’ve already completed your application and enrollment, are making your monthly payments, and you’re well on your way to loan forgiveness under PSLF. Then, you decide to get married. Your spouse may or may not work in public service, may or may not have student debt, and may or may not have excellent credit. How will marriage impact your eligibility and monthly payment amounts? Let’s look at how becoming a newlywed could change your PSLF enrollment and eligibility.
Your Debt is Your Debt, Your PSLF is Your PSLF
When you become legally married, your reported household income could change drastically, depending on how much your spouse earns. As such, your monthly payments under your IDR plan could be altered.
Your total debt and payment history won’t change, but your future progress toward forgiveness might. Depending on what IDR plan you’re enrolled in, you may need to switch plans. You will likely need to explore what makes more financial sense for you as a couple – filing taxes jointly or separately – and PSLF is likely to influence that decision. Also note that in the PSLF program, you cannot accelerate your forgiveness event by making extra or more frequent payments. You must make 120 monthly payments over the course of ten years.
If you and your spouse are both pursuing PSLF, you cannot combine your payment history– you each need to work full-time and meet the qualifications independently.
Sorting Out the Details
One of the fundamental principles of PSLF is keeping your monthly payments as low as possible—not only to make day-to-day life easier and your financial life more manageable, but also to maximize the amount of forgiveness you’ll receive. If you and your new spouse are in vastly different income tiers, it could increase monthly payments and therefore impact the amount of forgiveness that the lower-income spouse will eventually receive.
IDR and Filing Your Taxes
Research the details of your specific IDR plan to see what the requirements are, what happens if your household income jumps, and what the rules are when it comes to filing taxes separately or jointly with your spouse—this varies depending on the IDR plan in which you are enrolled.
Filing your taxes separately (as “married filing separately”) can exclude your spouse’s income from yours, keeping your monthly payments steady and preserving your eligibility for forgiveness. This generally works under the PAYE and IBR plans if your spouse does not have loans. Under REPAYE, however, both incomes are considered even when filing separately. (Note: REPAYE will be phased out under the new SAVE plan, which should not include spousal income when filing separately. See studentaid.gov for more information.)
Be sure to speak with a tax advisor about the specific implications of your filing status, however, since you may be taxed at a higher rate when filing separately. An expert could help you sort out which scenario makes the most sense for your household.
Til “Debt” Do You Part
Getting married may impact your PSLF future, but it doesn’t have to. Consider consulting with a student loan specialist, weigh the pros and cons, and use debt calculators to figure out what makes the most sense for your situation. You may be able to switch IDR plans, change how you plan to file your taxes, or make other preparations so that nothing comes as a surprise and you can still reach your goal of student loan forgiveness in ten years.
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