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Lives of Doctor Wives: Tax Advice for Minimizing Loan Repayment Amount?

Thursday, February 24, 2011

Tax Advice for Minimizing Loan Repayment Amount?

My husband is graduating in May and will begin residency...which also means loan repayment begins. Does anyone have any advice of filing our taxes this year to minimize the monthly repayment amount? Or any financial advice on this in general? We have friends who graduated last year and filed married jointly and wished they hadn't because it made their med school loan repayment amount astronomical.

Thank you in advance!

3 weeks MSIV's :)

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15 Comments:

Blogger Jaidi Clayton said...

I don't have any tax advise on this, but I will say that we made the choice to forebear our loans through residency. You have that right, and it is really easy to do. But obviously that is a personal decision. For us, with 3 kids and all the bills we see, it made more sense to put them off til after residency.

I do know that you can use a deduction or credit for loan repayment, but I am not sure on all the details.

Good luck. It is a great time to be in! We went through it all last year and I am sure you are looking forward to match day as much as I was! :)

February 24, 2011 at 1:23 PM  
Blogger Stephanie said...

we are totally putting it off until after we are out of residency. there is no way under the sun we could handle a loan payment on a resident's salary supporting a family of 4.

February 24, 2011 at 2:47 PM  
Blogger Amanda E. said...

I totally wish we could defer for the additional 4 years through residency, but unfortunately only some of our federal loans are eligible for that in our case...ugh.

February 24, 2011 at 2:53 PM  
Blogger Jeni said...

We were only able to forebear some of our loans which was really difficult when the 6 month grace period approached. But we just did our taxes and because we have four children and only worked from July to December last year we are getting quite a nice tax return which will help us through this year and the loans we have to start paying.

February 24, 2011 at 4:25 PM  
Blogger The St Julien Family said...

Our loan repayment didn't go by the previous year's tax return. It was done by how much he makes in residency (since he is the only one working) and our family size (most loans are done like this now). We aren't paying very much a month. I know a family who doesn't have to pay anything as a family of 6!

February 24, 2011 at 6:06 PM  
Blogger Melisa said...

Our lender started to make us pay, but then they sold the loan to another company that is letting us forebear. Family of 5 in Philly on a resident's salary. Cannot afford big loan payments...

I am a SAHM, so filing jointly didn't change our taxes.

February 24, 2011 at 6:29 PM  
Blogger Mrs T said...

Thank you all for your advice! Hearing your responses made me revisit the 'can i please be a SAHM' conversation with my soon-to-be-resident husband...praying for a match in a place with low cost of living!

February 25, 2011 at 8:16 AM  
Blogger Melisa said...

I've never regretted being a SAHM, even though it meant things were tight.

Low cost of living is really nice, but the program here is fantastic, so that is worth the sacrifice. We just do what we gotta do! LOL!

February 25, 2011 at 8:24 AM  
Blogger TheFamousStacie said...

We too have to pay some loans. I think 3 loans totalling about $200 per month.

The rest we have in forbearance. You have to seriously stay on it though.

We get about 40 pieces of mail a month regarding loans and we sometimes get behind opening them.

We got into a bad situation because the folks who work at the loan institutions seem to have no idea what form one is supposed to fill out for forbearance during residency.

They kept mailing us forbearance forms and we'd fill them out and mail them back and they'd inform us it was the wrong form. This cycle would go on for a month or two while the loan was getting further and further behind payment.

Two of his loans got behind in the forbearance process and they notified the National Credit Bureaus. Now he can't even qualify for a gas card!

February 26, 2011 at 8:26 AM  
Blogger Camilla said...

Yep, I was gong to add that he should look into 'economic hardship' (this is what UHEAA calls it). It is a pain cause you have to fill out forms every year, and you still have intereste accruing on your loans, but it sure helps out with a strapped budget.

February 26, 2011 at 7:07 PM  
Blogger Lindsey said...

You should check out the link below for income based loan repayment. Depending on the type of residency and if you can squeeze a few hundred out of your monthly budget, this may be a way to make payments more affordable for you as well as not have to pay as much back overall.

https://www.aamc.org/advocacy/meded/79048/student_loan_repayment.html

You should look into consolidating and filing for economic hardship though. The interest you pay on student loans is tax deductible, but it may not really help offset the costs of having to pay that much.

February 27, 2011 at 2:37 PM  
Blogger Josh_Liz_Mann said...

I don't have tax advice, but we are doing income based repayment and we are paying 10% of what we would owe if we were paying the actual payment. You can't file for income based repayment until 30 days before the grace period ends and have to reapply every year so keep that in mind. Good Luck!

February 28, 2011 at 6:50 PM  
Blogger Jaidi Clayton said...

I was just looking at some of the comments on here. There is a mandatory residency loan forebearance that you should be able to apply for with all of your federal loans. it is through the government and it is supposed to be available through any lending institution. You may consider calling your institutions. Unless they were private loans and not student loans. We have federal subsidized, unsubsidized, and PLUS loans and we have put them all into forebearance. https://www.dl.ed.gov/borrower/ForebearanceFormList.do?cmd=doViewRequirements&wizardName=Internship

You might want to call your financing institutions and ask them about it.

March 7, 2011 at 5:20 PM  
Blogger Laura said...

I don't really have an answer or comment about filing because we're a 2-income household, so we've been able to make our student loan payments (we both work, my student loans aren't crazy high like his and we don't have kids), but I wanted to share what we did.
When my fiance was about to graduate from med school 2 years ago, we met with a financial advisor right about 6 months before we moved on to residency. It was the smartest thing we did! We filled out tons of paperwork about our loans, savings, budgeting (a pain, but it helped us really see where we stood), and from that we told him what we hoped to accomplish in the next 5 years (move, get married, buy a house, etc). He was able to give us realistic advice about how we should handle our money and the best way to tackly money issues over the next 5 years. Every couple or family's plan will be different, but the information he gave was invaluable to us and it was so helpful to us to feel like we had a plan.
I hope this helps!

March 13, 2011 at 6:36 PM  
Blogger Christine said...

We are on IBR, which is manageable. DH was not willing to forbear with the compounding interest that would occur on our loans in forbearance. For us, IBR was the better deal. I'm also a SAHM.

March 14, 2011 at 10:19 PM  

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