It can be wildly cheaper or wildly more expensive. Really just depends. A friend at UC Davis said housing options there are so limited that staying on-campus, even with the high price of dorming and meal plans, is usually cheaper. Meanwhile, over here in Florida, moving out has been WAY cheaper – on the order of about half the cost of staying on campus.
@mommdc I wish I qualified for this but “income based repayment” for my student loans require that my husband and I file our taxes separate even though we are married. So while we loose a tax benefit overall of about $3k, it saves about $5k a year in payments. My student loan balance when I graduated was 100k they were out in deferral status for a few years and now because of interest (I’ve been out of grad school for 8 years- my balance is 130k -and all of these loans are federal loans- nonprivate loans.). The graduated payment plan would required me to pay $1800 a month. Right now I’m on the income based repayment plan and pay $1300 a month so a savings of $500 but I can only do that IF I file separate taxes- the IRS penalizes married couples who have student loans!
Imagine $1300 of your take home just going to student loans? My 90k salary - after paying student loans -is basically the equivalent to a take home salary of about a person making $25and I know this because my sister makes $25k a year and her and I talk about this all the time.
I did not know that you had to file taxes separately to get income based repayment on student loans, or do you mean in order to claim the student loan interest deduction?
https://www.irs.gov/publications/p970/ch04.html
^about student loan interest deduction
it seems you might qualify for both the student loan interest deduction and AOTC if you file jointly, if your MAGI is under $160,000.
If you pay back $1,800 a month, you would pay back the loans faster and pay less in interest.
You were thinking you might be able to help D with some college costs with monthly payments.
You could figure out how much in taxes you could save with the AOTC and SLID.
Taxpayers who are married filing separately cannot claim the up to $2500 American Opportunity Tax Credit.
^yes, that’s what OP was saying.
She cannot qualify for AOTC if she files taxes separately to get IBR.
But I’m saying that she might get AOTC andstudent loan interest deduction if she files jointly.
Hey @Jenn1976 ,
Do you practice public interest law?
Will you be eligible for loan forgiveness once you complete working 10 years and have made your payments?
http://equaljusticeworks.org/ed-debt/students/public-service-loan-forgiveness
Yes, I was able to get a job with the government a few years out of law school & the job is considered public interest. I’ve been there for a few years now so at least for me, in about 6 years they will all of my loans will be waived.
Well worth it especially to be making $90k in public interest, which often pays much less.
Yes, and thank you.
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Imagine $1300 of your take home just going to student loans? My 90k salary - after paying student loans -is basically the equivalent to a take home salary of about a person making $25 and I know this because my sister makes $25k a year and her and I talk about this all the time.
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You pay about $15k per year in loans. Do you get to deduct the interest?
^I think the MAGI has to be under $80,000, or $160,000 if filing married filing jointly, to claim student loan interest deduction. (Info in post #23)
So OP might be able to claim that deduction if she filed jointly.
Might be worth looking into imo. And then they could claim AOTC as well.
If you pay $1,300 per month for 10 years on your loans, that would be $156,000. You said the beginning balance was $130,000. Are you sure that the IBR amount is correct? There might not be much left to forgive after paying for 10 years.
That that doesn’t include interest. Interest compounds and although my payment is $1300 a month, only about $300 goes to the principle if you know what I’m saying.
I still think the IBR payment amount seems too high. Isn’t it supposed to be like 15% of AGI?
Might be worth it to have the loan servicer check to see if it is calculated correctly.
Interest on student loans does not compound, except once at the beginning (if you have interest accruing while you are a student, it is added to principle to come up with the payment. After that, accrued interest is paid first out of a payment, and then principle.
So, $1000 a month is interest only?
How much of that is deductible???
Or do you have to file jointly to deduct the interest? If so, are you missing out of a large deduction?
@Madison85 what’s the deal with this?
Student loan interest of up to $2500 is allowed as an above-the-line deduction if certain conditions are met (cannot be MFS, MAGI under $160k for MFJ or under $80k for Single).
@twoinanddone I do know that while the loans were in deferral status, the interest accrued (they were deferred my first entire year after graduation and then I had a hardship deferral due to my husbands surgery where he missed a lot of work one year) anyway, my original balance of $102,103 is now $127k due to interest &these loans are all managed through Ed Financial - Department of Education.
But by the payment amount it sounds like you are set up for 10 year repayment.
The interest on the loans was like 6 or 7 %?
Shouldn’t IBR be set up for 20 or 25 years?
If it was me I would investigate your repayment options. So that your payment is lower and you benefit from the public service loan forgiveness after 10 years of service.
Because if you are actually paying more than the correct IBR amount then there is no benefit in you filing taxes separately. You could possibly amend your taxes three years back and claim the student loan interest deduction.
@Madison85, can you amend and go from filing separate to jointly?