Welcome readers of The College Investor! I’m joining my friend Robert Farrington’s Student Loan Movement.
The name DocWife comes from the fact my husband has six-figure worth of student loans from medical school that we are trying to tackle. I write about family finances to empower and educate women who are married to medical school students and doctors.
Any woman in charge of managing the household and has lots of student loans, whether her own or her spouse’s, will find that my writing speaks to her.
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You vow to love one another for better or for worse, and in good times and in bad. But “worse and bad” are underlined. His six-figure medical student loan burdens are your burdens, too.
$189,165 is the amount of student loans that a typical medical student has, according to AAMC (October 2016). It is also the figure in the headline for this article, I just rounded up to $190,000.
These loans don’t care whether you met later and inherited the loans, or you married him before he took them out. It’s an avalanche waiting to drown you guys.
With your DrSpouse working “80” hours per week, he doesn’t have time or interest to figure out what to do. Just like how you handle every logistics in your family, you need to learn how to manage them.
See related: 5 Myths about student loans that are costing you thousands
Your resourcefulness is an amazing quality that will bring your family financial success.
I go through 5 tips on how to manage his student loans.
1. Find out where his student loans are
Does he owe student loans? What kind are they and who lend the money to him? You need to find out.
There are two types of loans: federal and private. Let’s tackle federal loans first and then private.
How to find federal loans
To find out what federal loans you have, you need to go to NSDLS, which is the federal loan database. Grab the .txt file from NSDLS, which is an ugly file that is chockful of important information. Get this file by following these steps:
- Go to Federal Student Aid FSA ID page and create an FSA ID.
- Go to NSLDS Student Access and enter in your FSA ID.
- Click on “Financial Aid Review” and download the .txt file.
All your federal loan are listed on that .txt file.
How to find private loans loans
Private loans are trickier to track down and needs detective work. We usually think of a credit report as just listing your credit score, but it actually has more information than that. Your credit report will list all your lenders. Knowing who your lenders are, you can call them and get information from them.
You are eligible to get one FREE report each year from Annual Credit Report.
2. Federal student loans are discharged in case of death, but private student loans may not be
Of the loan types, federal vs. private, the ones you want are federal. I know that’s not saying much because you want none. But if you had to pick, federal is better.
(It’s like I’m telling you if you had to pick an STD, you should pick one that’s easily detectable and treatable.)
Federal loans are the best ones to have because they have perks that private loans don’t. One of them is that they are discharged in case your DrSpouse’s untimely death.
The exception is if you live in one of the nine community states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) — and you got married before your DrSpouse took out the federal loans — then you may be on the hook if your DrSpouse dies.
On the other hand, if your DrSpouse dies with private loans, most private lenders do discharge them but not all of them do. This is where you have to refer to the fine print before you refinance.
For example, Splash is one of the private lenders offering great rates and I recommend shopping there. As of this writing, Splash does discharge loans while your DrSpouse is in training, but does not if he is a post-training physician. Like any company, they may change this policy at any time.
It’s a good idea to mitigate against the risk of his early death. Take out a larger (or additional) term life insurance policy in the amount of the loans. You should look into PolicyGenius, which is easy to use and is like the “Kayak” of life insurance.
3. If you divorce, you may be on the hook for his student loans
Divorce is a murky event even without student loans in the picture. I won’t go into this into depth but the answer to what happens to your DrSpouse’s student loans if you divorce is that it’s complicated. It depends on your state, if you were married when the loans were taken out, and all that jazz (a legit legal term).
4. You are on the hook if you co-sign on his student loans
Sometimes your DrSpouse’s credit score is too low and the lender won’t agree to give you guys a loan for his tuition unless you — as his spouse — agrees to co-sign because your credit score is higher.
It means that company thinks your DrSpouse’s loans are too risky, and they want to use you as collateral in case your DrSpouse is unable to pay.
Unless you absolutely have to, I don’t recommend co-signing. Sure, what is his is yours, and what is yours is his. But you want all that to happen on your terms, not anybody else’s.
5. If you work, you may be able to lower your monthly student loan payments if you file taxes separately
Attention: If your DrSpouse is going for PSLF and you bring in income, you need to know this.
If your DrSpouse is not going for PSLF and you don’t bring in any income, skip this section.
This applies to you? OK read on.
PSLF is a forgiveness program that forgives all of your DrSpouse’s student loan debt after making 120 qualifying payments while working for a 501c3 not-for-profit employer, which is 10 years. To win the “game” of PSLF, you want to get the most forgiven — meaning you want to pay the least that PSLF allows you to get away with. So, your goal is to get your monthly student loan payments as low as possible.
To strategize the most out of PSLF, you need to pull out a calculator and take a close look at three things:
- The income you bring in
- The payment plan your DrSpouse is on
- How you guys file your taxes
All three of these are moving parts that are in play.
There are two ways to file taxes: jointly or separately. When you file taxes separately, you get penalized for it. But if you save more than you get penalized, then it might be worth it.
Then there are three good income-driven payment plans:
If your DrSpouse is on IBR or PAYE, you should run the calculations both ways — filing taxes separately and jointly — and compare to see which one comes out ahead.
For the tax portion, use the tax calculator through TurboTax or ask your tax preparer to do it for you. For the student loan payment portion, use the StudentLoans.gov calculator.
If your DrSpouse is on REPAYE, your situation is straight-forward because then you should always file taxes jointly. It’s a no brainer. REPAYE calculates both yours and your DrSpouse’s incomes no matter how you guys file your taxes.
Need to learn more about student loans?
“Theresa, I need to learn more about this. But I’m overwhelmed and don’t want to spend hundreds of hours digging. Where can I start looking?”
If you want to learn all this in under three hours, take the Student Loan Eraser course. Everything is all in one place. I just give you the quick and dirty, but you will be able to apply what you learned immediately to your situation after you take the course. It’s a time saver.
I took it and saved thousands on my husband’s loans, as well as learned everything I wrote in this article. So I’m cool recommending it.
When you say “I do” to him, you also say “I do” to things you don’t foresee — like the nights you stay up to care for a sick child, the houses you move into together, periods of unemployment, and ordinary moments of joy in the every day.
Life is unpredictable and beautiful that way. You say “I do” to all of it because you choose to be in all of it together.
Managing his student loans is just a part of it.
One of the ways that will make your family financially secure and ahead of all your peers is your resourcefulness. It makes your DrSpouse a lucky man.