When developing a student loan repayment strategy, often the first consideration is determining whether your employment will qualify your loans for PSLF at some point in the future. Those who wish to take full advantage of PSLF should usually seek to minimize their scheduled repayments with income-driven repayments, which will then leave the maximum amount to be forgiven after ten years.

Individuals who won’t qualify for PSLF can have a tougher decision to make, depending on their expected earnings, expenses, and resulting cash flow surplus in a typical month.  

One additional measure that can reduce your overall payments is to begin your formal repayment plan early, even though your loans may still be eligible for deferment or in their grace periods.  Doing so will “start the clock” that much sooner, which provides significant benefits for income-driven plans: (i)forgiveness can occur at an earlier date, and (ii) earnings during deferment or grace periods tend to be relatively low, resulting in a much lower monthly payment during those years.  Beginning early can also benefit Standard, Graduated, or Extended repayments as well, since there will be less time for additional interest to accumulate.

Finally, review your tax filing status with your CPA or tax advisor.  A married borrower who files separately instead of jointly may exclude the other spouse’s earnings from IBR, PAYE, or ICR repayment calculations (but not REPAYE), which can then reduce the resulting monthly payment.  The effectiveness of this approach is dependent on the other spouse’s earnings potential and could be offset – perhaps drastically – by the other benefits that joint filing may provide (lower tax brackets and access to certain credits, exemptions, and deductions).

To wrap up, every situation is unique, and it is important to have a repayment strategy in place.

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