Consolodation Question

wacdenney · ‎05-16-2014

Hello! This will be my first post in this section of the forum so please be gentle...

My wife graduated several years ago and is paying on her student loans. I am still in school so all my loans are in deferment. My question is... When I graduate can we consolodate her and my student loans in together and make a single income based payment? She believes they are already considering my income on her income based payment. We do file joint tax returns if it matters.

laz98 · ‎05-16-2014

No, you cannot. I checked on the web page for Direct Consolidation loans. Also, I found this on the FinAid site:

Before July 1, 2006, married couples could jointly consolidate their loans. Although this could qualify the couple for a longer repayment term and lower monthly payments, it often caused problems when a couple got divorced later. By jointly consolidating the student loans, each spouse assumes full responsibility for repaying the debt. It is not possible to split up the debt during a divorce proceedings, so each spouse remains responsible for paying back the loans. If one ex-spouse fails to make a monthly payment, the other ex-spouse is responsible, and his/her credit record is affected. Similarly, the loan is no longer eligible for an in-school deferment, since both spouses must be enrolled in college for the loan to qualify for a deferment. (If one spouse dies or becomes permanently disabled, however, that portion of the debt is forgiven.) For these reasons, Congress repealed the ability for married borrowers to consolidate their loans together as part of the Higher Education Reconciliation Act of 2005.

wacdenney · ‎05-17-2014

So... Since they consider my income when determining her payment for her income based repayment plan, does that mean when I am done our student loan payments will be doubled? Is there a way they can consider only her income for her payment and only my income for my payment? So that we aren't making payments based on essentially the same household income X 2?

laz98 · ‎05-17-2014

@wacdenney wrote:
So... Since they consider my income when determining her payment for her income based repayment plan, does that mean when I am done our student loan payments will be doubled? Is there a way they can consider only her income for her payment and only my income for my payment? So that we aren't making payments based on essentially the same household income X 2?

I'm not married, but this is what I found online at loanconsolidation.ed.gov. I don't think it will double.

How is the amount of my payment calculated under the IBR Plan?

Under this plan, your required monthly payment during periods when you have a partial financial hardship will be no more than 15 percent of the amount by which your AGI exceeds 150 percent of the poverty line income for your family size and state, divided by 12. In addition:

If the calculated payment is less than $5.00 your required monthly payment will be $0.00.
If the calculated payment is equal to or greater than $5.00, but less than $10.00, your required monthly payment will be $10.00.
Unless you are married and file a joint federal tax return with your spouse, and your spouse has loans that are eligible for repayment under IBR (see below), if all of your eligible loans are not Direct Loans, your monthly payment amount will be adjusted by multiplying the calculated monthly IBR payment (as described above) by the percentage of the total amount of your eligible loans that are Direct Loans.
If you are married and file a joint federal tax return, and if your spouse also has loans that are eligible for repayment under IBR, your monthly payment amount will be determined as follows:

Your percentage and your spouse's percentage of the total combined eligible loan debt of you and your spouse will be determined;
Your calculated monthly IBR payment (as described above) will be adjusted by multiplying the calculated payment amount by the percentage determined in #1.
If all of your eligible loans are not Direct Loans, your adjusted monthly payment amount as determined in #2 will be further adjusted by multiplying that amount by the percentage of the total amount of your eligible loans that are Direct Loans.

If you are married and file your federal income taxes jointly with your spouse, both your AGI and your spouse's AGI will be used to calculate your monthly payment. If you and your spouse file taxes separately, only your AGI will be used to calculate your monthly payment.

Your repayment amount may be adjusted annually. It may be higher or lower depending on changes in your income.

wacdenney · ‎05-17-2014

OK. Well that is encouraging and I would like to say thank you for your help!

One last question. We both work for the state for a non-profit and at some point may be eligable for forgiveness and this is all very confusing. Are there people somewhere that you can hire to look over your situation and advise you as to your best course of action?

laz98 · ‎05-17-2014

@wacdenney wrote:

We both work for the state for a non-profit and at some point may be eligable for forgiveness and this is all very confusing. Are there people somewhere that you can hire to look over your situation and advise you as to your best course of action?

Probably, but I'm not sure. So many people with questionable motives out there! I personally would start here:

Public Service Loan Forgiveness

Anonymous · ‎06-12-2014

My husband and I consolidated through the Fed loan servicing. Both of us applied for the IBR, they take into account that we both have loans and they look at our income as one, because we do our taxes that way. The loans are not consolidated together. But the monthly payments are based on our joint income, our joint debt, & family size.

If you do apply for consolidation and are expecting to do the years of service loan forgiveness program, then make sure when you consolidate you choose the correct type of loan I believe it is the Henry D. Ford Direct Loans. And make sure you only include loans that are eligible I believe it is stafford, both sub and unsub. I believe that perkins loans do not qualify for that program, we left ours out of the consolidation. Make sure you read about it to do it correctly.