Student loans and SAHP-ing

[swamp]

May 11, 2012 6:45:14 GMT -5 resolution said:

People Taxman started sexting each other being a pigand turning it into an EE thread so it got locked.

Fixed.

And to answer the OP:

I don't care what someoen else does, it's up to them and their spouse. I wouldn't do it, and I'd freak right out on my husband if he did it.

[Deleted]

May 11, 2012 7:44:06 GMT -5 @moneyjenny82 said:

Really? The BLS Occupational Handbook says medical coding has an estimated job growth of over 15% for the next decade. Mostly, I want to find a job that will allow me to work on "off" days as well as regular week days so that we can stagger the days caring for DS.

There's not a lot of opportunity around here (but that could just be a local problem). There bunches of job postings on the AAPC website for coders in the midwest, but we wouldn't relocate the family for a coder's salary.

[Wisconsin Beth]

May 10, 2012 19:41:03 GMT -5 Works4me said:

I just can't see how it is possible to pay for the necessary living expenses of housing, transportation, food, clothing, basic emergency savings, etc for a family of three or four on one normal income while also paying on student loans of that size.

DH and I don't have student loans but he's got health issues that are costing us somewhere in the range of $1500 a month. If you'd have told me prekids that our budget would suck up $2500 (between DH's stuff and dcp), I'd have thought you were on crack. But somehow we're making it work.

[Deleted]

Beer, there are a decent amount of openings around here but a lot of the hospital openings are for part time and per diem positions. It's like that for a lot of allied health occupations.

[NomoreDramaQ1015]

DH has mentioned he is not entirely comfortable with my debt load and me being a SAHM, but if I really wanted to he said we'd find a way to make it work. I don't have six figures though, I only carry $28k.

To make that work we'd need to be willing to trim back on a lot of other things so we can easily afford to pay my loans back on one income on top of all our other expenses. If I had the burning desire to stay home, I'd slash our budget to the bone.

In Carl's case I think that if they really cut back on the spending and he relaxed on retirement planning they could probably have a single income household even with Mrs C's loans. The problem is she doesn't seem to WANT to cut back anywhere and she isn't going to be able to have both.

I don't think having student loans automatically rules out someone being a SAHP. What rules it out is when you refuse to compromise/cut back on anything else so can afford to live on one income.

[The J]

May 11, 2012 6:51:48 GMT -5 quotequeen said:

Intellectually, I understand that (setting aside loan forgiveness) the student loans are a sunk cost and a couple should do what is best for the family unit going forward without regard to where the debt came from. But I don't think I could accept that my spouse took on that kind of debt and put our family in that kind of a hole for no good reason and it wound up being a complete waste. I would want the person to work at least long enough that savings from his salary exceeded the amount of the debt (independent of whether we chose to actually pay it off) before quitting. So in my case I have greatly exceeded that and the student loans would no longer be a reason for me to feel guilty about not working or taking a lower paying job. But if I were married to somebody who'd for some reason thought it was a good idea to take out 125k in student loans to get a 45k a year job, it would be a much bigger problem. And really, it's not just the amount of the loans, it's whatever the cost was to our family finances. So if we were able to cash flow tuition for my husband to go back to school, I would expect him to work long enough to save up that difference as well.

I mostly agree with this -- assuming you don't have separate finances (which would add a whole different layer to this), it's really one common pot of money and obligations, whether they originated with one party or the other, are coming out of that pot. It would still, however, be difficult to accept that my spouse put us behind the 8 ball by taking on large student loan debt without balancing that out with an equal financial contribution to the household. It wouldn't have to be an ongoing contribution as long as there were payments, just a contribution equal to the amount taken in loans.

That being said, I can also see where it might not make sense financially in a given situation to have that spouse work instead of being a SAHP, so I could see being flexible.

[The J]

In Carl's case I think that if they really cut back on the spending and he relaxed on retirement planning they could probably have a single income household even with Mrs C's loans. The problem is she doesn't seem to WANT to cut back anywhere and she isn't going to be able to have both.

He also doesn't want to relax on the retirement planning.

[midjd]

It would still, however, be difficult to accept that my spouse put us behind the 8 ball by taking on large student loan debt without balancing that out with an equal financial contribution to the household. It wouldn't have to be an ongoing contribution as long as there were payments, just a contribution equal to the amount taken in loans.

That's an interesting way to think about it. So for example, if you take out $100K in loans and then gross (or net?) $100K in salary before becoming a SAHP, that's OK? Or did you mean enough to pay off the SLs? (Say $100K in loans at 6.8% and $250K in earnings?)

I think if the student loans were DH's instead of mine, and he wanted to be a SAHP, I *might* be OK with it as long as he could cover the payments himself (which, setting aside IBR, would probably be the equivalent of a part-time job). Never thought about it in terms of contribution to the HH equaling the amount taken in loans, though.

[NomoreDramaQ1015]

He also doesn't want to relax on the retirement planning.

Right. If you're going to go down to a one income household you're going to have to compromise on both ends. If you aren't willing to compromise to where you can be comfortable on one income it isn't going to work.

[The J]

May 11, 2012 9:02:27 GMT -5 midjd said:

That's an interesting way to think about it. So for example, if you take out $100K in loans and then gross (or net?) $100K in salary before becoming a SAHP, that's OK? Or did you mean enough to pay off the SLs? (Say $100K in loans at 6.8% and $250K in earnings?)

I think if the student loans were DH's instead of mine, and he wanted to be a SAHP, I *might* be OK with it as long as he could cover the payments himself (which, setting aside IBR, would probably be the equivalent of a part-time job). Never thought about it in terms of contribution to the HH equaling the amount taken in loans, though.

I'm not talking about annual income. I'm talking about savings from that income. So if you took out $100k in student loans, but managed to save $75k for retirement and $25k in cash (not deferred spending money, but savings), at that point you'd be net worth neutral.

[whoisjohngalt]

What's IBR?

[Deleted]

May 11, 2012 9:05:25 GMT -5 NomoreDramaQ1015 said:

He also doesn't want to relax on the retirement planning.

Right. If you're going to go down to a one income household you're going to have to compromise on both ends. If you aren't willing to compromise to where you can be comfortable on one income it isn't going to work.

exactly. Unless you end up making and saving a crazy amount of money over 15-20 years, having a SAHP/S means you probably won't be able to retire as early as you want, if ever.

[whoisjohngalt]

Oh and just so we clear, I pretty much fainted when I found out how much SL debt my than-BF-now DH had. We paid it off in 1.5 yr but when I think about how many rental properties I could have bought with that money - let's just say I try not to think about it bc than I pretty much have a minor heart attack every time

Lena

[973beachbum]

May 11, 2012 9:07:26 GMT -5 whoisjohngalt said:

What's IBR?

IBR is income based repayment. There is also ISR which is income sensitive repayment. They are both plans that set the payment according to the loan holders income.

there are fine differences between the two but most now are on IBR including my DH. He also works part time as a CC prof. So hopefully in 7 more years his SL will be wiped out thanks to you all you tax payers. ;D

[midjd]

I'm not talking about annual income. I'm talking about savings from that income. So if you took out $100k in student loans, but managed to save $75k for retirement and $25k in cash (not deferred spending money, but savings), at that point you'd be net worth neutral.

Ah, got it.

Lena, IBR is the income-based repayment plan available for most federal student loans - payments are capped at 15 percent of your [AGI] - [1.5x poverty level]. I think the new graduates have a plan available that caps it at 10%. The maximum repayment term is 25 years, in some cases the balance can be forgiven after 10.

[Deleted]

DH and I worked really hard to pay down about 20-30k of my student loans the first year we were married. It dropped the payments from 1.2k a month to about $256. I'm lucky I'm able to stay at home without compromising our financial stability. In Mr. and Mrs.C's case they earn an equal salary and I don't think they could make it on just one without several years of Dave Ramsey type debt repayment.

[whoisjohngalt]

Oh OK. Got it.

[whoisjohngalt]

As far as C is concern, I don't think it's even a matter of SL or retirement or whatever. It can be really hard mentally to know that you are the sole income for the family, especially when there are kids involved.

My DH always wanted a spouse who would be SAP, but I really thinks what helps him sleep better at night is knowledge that I "could" get a job if need be.

Lena

[midjd]

True, Lena. I was the sole income for our HH for about a year while DH was in school... it was stressful at times, but not as bad as I'd thought it would be, I think only because I knew it was a temporary situation and DH has never had trouble finding a job (and has no real desire to stay at home).

[Taxman10]

May 11, 2012 8:01:39 GMT -5 swamp said:

May 11, 2012 6:45:14 GMT -5 resolution said:

People Taxman started sexting each other being AWESOME

Fixed.

And to answer the OP:

I Love the TAXMAN and want to be his stay at home wife

I fixed that for you.

You're welcome :-)

and to answer the OP: to each their own....

[raeoflyte]

DH's student loans are still in deferrment, but I'll probably be the one making the payments on 30k plus of student loans.

He didn't plan to make things worse for us. When he started school, the plan was to get through vet school, have 70-90k worth of loans, but graduate making 6 figures. We could pay off the student loans in just 2-3 years if we threw my entire income at them, and then I could go back to school.

But in the process of getting his bachelors, the economy tanked, the vets that he had talked to and made his initial plan with got swept to the 4 corners of the US to stay employed and still took big pay cuts. The cost of grad school didn't go down, and since his new starting salary would be at best $60k, he finished his bachelors and kissed vet school goodbye.

Unfortunately the bachelors is a bunch of bs that is only good for getting you into grad school, so he still works 30 hours a week at the job that his original 8k in student loans got him. Once the baby gets here, he'll cut down to 20 hours a week.

So yeah--student loans suck...

[sheilaincali]

I have no problem with SAHPs provided that it's an arrangement that works for both spouses and something they agree on. I do not agree with people demanding to be a SAHP while the employed spouse struggles to make enough money to make ends meet.
Baring medical issues or like Sam said - the birth of quads- I think it's irresponsible to want to be a SAHP while paying off tens of thousands in student loans. Puts an unnecessary strain on the family budget.

To be fair- I have known a lot of SAHPs that were really bad examples (didn't cook, clean, etc)

[The Walk of the Penguin Mich]

You didn't "take a spot" from anyone. You rightly earned your own spot. I think a doctor who goes on to spend his life injecting botox into rich women's lips is a waste of a doctor too. His spot could have been used for someone who wants to fix serious medical problems not make a fat living off of rich people vanity. So, you can make that argument in a lot of ways.

This is a HUGE issue in dentistry. Over the last decade, many dental schools have closed and the remaining schools are training to capacity. At this point, the dental society figured that they were capable of replacing dentists as the retired.

There are 2 kinks in this......roughly 50% of each dental school class is female and the stats that the faculty are getting is roughy 50% of the female dentists stop practicing when they have a kid. This is leading to a deficiency that cannot be easily remedied with the current infrastructure.

Not only that, while dental education is expensive, it is also partially subsidized by the state and state budgets crunched to the point where they may have to start decreasing class size.

The fallout for all of this is that search committees are going to make it more difficult for female students to get educated. I know that the dental schools like to have balanced statistics, but they are cognizant of this fact and are caught between a rock and a hard place, knowing that of the class of 100 students, you are going to lose at least 25 to dropping out of the workforce. Not only that, dentistry is technical and when you drop out for a significant time, you lose your technical skills. So those women dropping out are not going to be able to easily reintegrate into the dental community.

So don't think that the professional schools are not aware of this. They are, and are somewhat hamstrung. But the US population is ultimately going to pay for this.

[Phoenix84]

"You didn't "take a spot" from anyone. You rightly earned your own spot. I think a doctor who goes on to spend his life injecting botox into rich women's lips is a waste of a doctor too. His spot could have been used for someone who wants to fix serious medical problems not make a fat living off of rich people vanity. So, you can make that argument in a lot of ways."

Mich1 said what I was trying to say far more eloquantly.

If you have a professional degree, there's a cost to society if you end up dropping out of the workforce. Not only (as Mich pointed out) are these programs often subsidized by state and federal money (so you're wasting tax dollars), but society needs these professionals. Just about any responsible adult can be a SAHP, but not many can be a doctor or lawyer. In these professions, spots for professional school are very competative and they only accept so many candidates per year. By getting in and then dropping out you took the spot of someone who may have dreamed of being a denist or doctor and would have practiced and done society good but now can't.

And to make a pre emptive strike, I'm not saying SAHP's don't benefit society or anything else like that, but it's strictly a numbers game. Society needs X amount of doctors and dentists and the like and those need to be out in the world practicing to meet needs. People dropping those could mean there is a shortage of those professions.

[Works4me]

May 11, 2012 8:11:12 GMT -5 Wisconsin Beth said:

May 10, 2012 19:41:03 GMT -5 Works4me said:

I just can't see how it is possible to pay for the necessary living expenses of housing, transportation, food, clothing, basic emergency savings, etc for a family of three or four on one normal income while also paying on student loans of that size.

DH and I don't have student loans but he's got health issues that are costing us somewhere in the range of $1500 a month. If you'd have told me prekids that our budget would suck up $2500 (between DH's stuff and dcp), I'd have thought you were on crack. But somehow we're making it work.

And what if you had $500-$1000/mo student loan payments on top of that? I think it is great that you are able to make the adjustments necessary. Keep on keeping on because it will get easier/better!

The reason I am concerned about this is because I have seen what happens to people. $h!t happens in life. In 25 years of medical social work I have seen too many people lose everything because they did not plan for the unexpected.

[shanendoah]

Looking at this from a slightly different perspective than SAHP.
Student loans are non-transferrable. If I die, they are gone. DH has no responsibility for them. If we divorce, my loans are mine. I can not make him responsible for them as part of the divorce settlement- even the ones that were taken out while we were married. That plays a huge part in my thinking about the student loan debt.
Now, we paid off DH's student loans like 5-6 years ago. He is currently back in school full time and we are cash flowing that- no more loans. But I am the only person earning money, so you could argue that I am paying for his education and that I will have a right to expect him to work once he gets his degree. But it's possible that he won't work. Our plan has always been for him to be the primary care giver. His current education plan has him graduating with his combined BA/BA in 2014, then going on to a masters and PhD program. (I will note that in the field he intends to get his PhD in, graduate students are more likely to be paid to be in school than to pay for school. But at the same time, even major schools like University of Washington only graduate about 7 people a year with a PhD, so the programs are small.)
I don't mind paying for him to be in school. It certainly beat paying for him to sit around the house depressed and not being able to find a job. He's happy and engaged in what he's doing, and that makes him a better husband and our lives overall happier.
At the same time, there is a possibility we will sell his mother's condo. The money that we get from that could be used to pay off all of my student loan debt. And I'm against that. Because the debt is mine. And inheritence money is his.
I wouldn't have a problem with us paying off my graduate student loans with inheritence money, because the grad school decision was one we made together, as the best choice for our family. But my undergrad loans? We didn't even start dating until only about 5 months before I graduated. Those loans are absolutely my responsibility, and I think it would be wrong of me to expect him to pay them off with his inheritence. (And, while they started out at like 7.8%, I was able to consolidate them in 2004 at 3.5%.)
So even though we are total common pot/combined finances people, and everything we have right now is OUR money, there are still some things I see as belonging to us individually- my undergrad student loans, and his inheritence money.
And while I'm all about doing what's best for the family, I also think, that as a loving spouse, I have to consider what would be best for him, if I weren't around. If I died, he would have spent his inheritence on debt that would have otherwise just disappeared. If we divorced, he would have spent his inheritence (money I'm not entitled to) paying off loans he was in no way responsible for. To me, that's just not fair to him, and I honestly believe that as his wife, whether I'm the sole breadwinner or he is or we both work, it is part of my job to protect and to be as fair to my spouse as possible, even if that might bite me in the ass later.

In the end, the answer is always to figure out what works best for you as a family that doesn't violate your personal ethics about the way to handle money and debt in a relationship.

[The Walk of the Penguin Mich]

Student loans are non-transferrable. If I die, they are gone. DH has no responsibility for them. If we divorce, my loans are mine. I can not make him responsible for them as part of the divorce settlement- even the ones that were taken out while we were married. That plays a huge part in my thinking about the student loan debt.

The corollary to this is that while you are married, HIS financial security will be challenged if you don't pay. It will impact your credit score, so if you don't pay the loans, then if you need a car, either he cosigns or you pay a higher interest rate. If you want to buy a house, your student loan payments are taken into consideration.

So if you separate, he won't be stuck with them.....but while you are together, it WILL affect him, particularly if you decide to be a SAHM. And in C's case, he'd be supporting 3 people and $100k of student loan debt on a $50k salary. OUCH!

[Wisconsin Beth]

May 11, 2012 10:49:01 GMT -5 Works4me said:

May 11, 2012 8:11:12 GMT -5 Wisconsin Beth said:

DH and I don't have student loans but he's got health issues that are costing us somewhere in the range of $1500 a month. If you'd have told me prekids that our budget would suck up $2500 (between DH's stuff and dcp), I'd have thought you were on crack. But somehow we're making it work.

And what if you had $500-$1000/mo student loan payments on top of that? I think it is great that you are able to make the adjustments necessary. Keep on keeping on because it will get easier/better!

The reason I am concerned about this is because I have seen what happens to people. $h!t happens in life. In 25 years of medical social work I have seen too many people lose everything because they did not plan for the unexpected.

We'd be up sh!t creek without a paddle and a hole in the canoe...

I couldn't be a SAHP to our kids when they were littler, I'd have been insane. And DH wouldn't be good at it either. Sometimes love is not enough because we do love those kids and each other but staying home with them as infants was not in the cards based on my and DH's personalities. I will probably be juggling work hours some when they're in school to do school stuff with them.

[Formerly SK]

May 11, 2012 9:22:28 GMT -5 whoisjohngalt said:

As far as C is concern, I don't think it's even a matter of SL or retirement or whatever. It can be really hard mentally to know that you are the sole income for the family, especially when there are kids involved.

My DH always wanted a spouse who would be SAP, but I really thinks what helps him sleep better at night is knowledge that I "could" get a job if need be.

Lena

Funny, DH was initially against me being a SAHM (we discussed this while dating) but now that I've done it for 7.5 years he doesn't want me to return to work. He definitely doesn't feel any pressure being the sole support. His fantasy is that I get a very flexible PT job that doesn't create DC issues, while at the same time I still get everything done around the house/yard/kids. I can't say I blame him as he's had a cushy home life for a long time now. Since I'm not about to martyr myself as a "do it all" woman, me returning to work is going to need a lot more conversations.

[qofcc]

So what's your view on SAHPs who have large student loans?
If they planned to not have a career then they were foolish for borrowing that much money. If they planned to have a very lucrative career, but wanted to take a break for a period of time to raise children, might not be a problem.


Are they burdening the working spouse?
Would depend on the household income. In Carl's case, yes.


Is it their obligation to pay off those loans themselves?
That would be up to the couple, but if the payments were seriously affecting their standard of living, then they should probably be finding a way to earn enough at least cover those payments.


Or, as long as both spouses agree to it, it's no big deal?
If it's ok with both of them why should we care?


Does it depend on the loan repayment terms? (E.g. what if someone's parent pays off the SL and the debt is then owed to the parent?)
That's an excellent point and the thread was locked before I had a chance to ask Carl what would he think about agreeing to let her stay at home for a few years as long as she and her mother figured out a way to make the minimum payments on her loans. If hypothetically someone had large student loans but wanted to take a few years off from work to raise children it would be nice if they were able to save up enough to make the payments during their time off.