Friday, December 28, 2012

Paying Back Student Loans and Tax Returns

 A favorite topic of  mine is financial aid, specifically student loans.  Recently, I consolidated my student loans and applied for the income based repayment plan.

 If you owe student loans , and need advice on consolidating and different repayment plans, feel free to send me a message. I worked in financial aid and I am successful in managing my student loans .

Recently, I talked about Married Filing Jointly vs. Married Filing Separately. I will like to add a benefit of filing Married Filing Separately. If you owe student loans and are in repayment , it may be advantageous for you to file Married Filing Separately. This may save you thousands and thousands of dollars over your lifetime.

 If you file Married Jointly, your student loan repayment plan is based on  your income and your spouse's income.  The  combined incomes may  disqualify you for the income based repayment plan and your student loan payments could be significantly higher than if you have not married.

Filing Married Filing Separately may decrease your student loan  payments by  thousands of dollars each year. You may potentially qualify for the income based repayment plan.
 an example of how filing status may affect your student loan payments:

You owe $60,000 in student loans. You make $39,000/year and your spouse makes $63,000/yr.

If you file married filing jointly with your spouse, your student loan payment will be based on $102,000 of yearly income. You will disqualify from the income based repayment plan , you will instead qualify for the standard based repayment plan and will pay $690 a month.

If you file married filing separately, your student loan payment will be based only on your income of $39,000. You will qualify for the income based repayment plan and will pay $130 a month.

 Filing married filing separately will save you $560 a month, that's $6720 a year!

If you want more information, please feel free to comment on  TaxCharm.
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1 comment:

  1. Very nice post, thanks for sharing the information. Keep up the good work.

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