| Student Loans, Getting Married, Getting a Mortgage....Yikes! |
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RobDude
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| Student Loans, Getting Married, Getting a Mortgage....Yikes! |
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I've been having a lot of trouble finding any concrete information online, so I figured I'd just ask....
My fiancee was recently accepted into a veterinary medicine program overseas. It's her dream and all that; but it's very expensive. We expect that she'll have something in the ballpark of $250k in student loans when she finishes. The majority of that will be 'Grad Plus' loans, that I believe have an interest rate of nearly 8%. Ouch.
If we're generous; she'd expect to earn 70k per year.
We'd been planning on getting married before we left for school, but now that I'm looking at the numbers, I'm concern about our ability to get a mortgage in four years when she is finished with school. If we're married, collectively, let's say we have $300k in student loans, but a combined income of something close to $120k - would that impact our ability to get a mortgage or impact the rate?
I've owned a condo and a house previously and have reasonably good credit and almost no debt (just student loans ~15k).
I've also been told that, if we are married, she might not qualify for as much in subsidized student loans (which are more favorable than unsubsidized student loans) - but I haven't been able to really quantify that in terms of dollars.
Does it make more sense to wait until after she finishes school and buy a house in my name/get a mortgage in my name, and then get married (with the assumption that we'll be in that house for a very long time)?
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Tue Jun 21, 2011 4:15 pm |
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oldguy
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quote:
$250k in student loans when she finishes. The majority of that will be 'Grad Plus' loans, that I believe have an interest rate of nearly 8%. Ouch. If we're generous; she'd expect to earn 70k per year.
The problem statement is - "poor decision-making at the outset". We see quite a bit of this in the current generation - a common one is to borrow $100,000 to get a degree in social work that pays $25,000. Obviously 100% of the $25,000 is needed for subsistence and the loan is unmanageable - and incompatible with the education. We have a breakdown - student counselers, parents? When I got my engineering degree (long ago), I received guidance from HS advisors, college advisors, parents, about salary expectations and college costs.)
In your fiance's case, a $250,000 8% loan, spread over 30 yrs, costs $1835/m, a total of $660,000. And the $1835/m = $22,000/yr 'net', that represents about $32,000/yr of her gross income - in her case, about half of her income. Financially she would be ahead to get a $35,000 job right now and skip the agony, LOL - but she won't, she wants to 'follow her dream'.
Is there a chance that she could modify the dream, go to a Stste Univ (how about Ames, IA?) and get her education for <$100,000? And then, as a graduation present, you spend $10,000 and take her to her dream country for a month or so as a reward for her "senesible compromise?
Otherwise, her answer is to marry well - and saddle the family with debt for 30 years - perhaps an acceptable outcome - but certainly not an optimal outcome.
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Tue Jun 21, 2011 5:41 pm |
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littleroc02us
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I agree with what Old guys states, why not look at a cheaper program for Vetenarian school, it's not like they only hire those who spend 200k instead of 100k on school. I'm of the opinion that you shouldn't be adding a mortgage, a wedding and 200k all at the same time. Why not have an inexpensive wedding, we did ours for 6k and it was awesome. Then you pay off the school loans and then you worry about a house. Otherwise as Old Guy says, maybe you wouldn't mind being heavily in debt for 30 years. Some people seem to enjoy having debt stick around forever.
Romans 13:8 “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”
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Tue Jun 21, 2011 5:50 pm |
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coaster
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Any particular reason you feel you need to buy a house right after graduation?
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Tue Jun 21, 2011 6:06 pm |
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RobDude
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I want to thank everyone who has posted so far. I realize now that my question was a lot more vague than I had intended it to be.
What I'm really trying to understand is the financial differences being 'legally married' will have for my wife and I, verse being single and having a girlfriend who lives with me. Also, when I say 'get married' - I just mean that in the legal sense, going to the courthouse, filling out paperwork.
I'm mostly concerned about our (or my) ability to get a mortgage in four years. I know that, unmarried, I've been able to get and repay two mortgages. I'm assuming I'd be able to get a third without any trouble if I stay single. What I'm not sure about is whether getting married would help or hurt my credit rating/my ability to get loans.
But I'm also interested in anything else that might have an impact. Emotional aspects aside, is it in our best interests financially to get married or to not get married?
I've heard that, if we are married, while she is in school, I'd pay significantly less in income taxes. But I don't know how true that is. On the other side of the coin, I've also been told that if we're married while she is in school, she'd qualify for less subsidized student loans (and again, I don't know how true that is or what $$$ amount to attribute to it).
I'm not really a fan of using credit, the only purchase I plan on making that would require a loan is a house. I do plan on buying one of those before my wife/girlfriend manages to repay her student loans. So I'm concerned about how being married to her will impact my/our ability to get a mortgage. I've heard that 'for most' mortgages, the lender will calculate your debt to income ratio to determine how big of a loan you can afford (I was told the ratio between your monthly debt payments and your monthly gross income can't exceed .36). However, I've also been told that it's more a guideline and that it doesn't apply to all kinds of mortgages.
So, ignoring things like other career options, other educational paths, and other living arrangements; given the situation I'm in, strictly from an economic cost/benefit approach; do we save more money by getting married or by not getting married?
I hope that makes sense. Thanks again.
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Tue Jun 21, 2011 7:09 pm |
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RobDude
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quote:
Originally posted by coaster
Any particular reason you feel you need to buy a house right after graduation?
Nope - I just want to compare/contrast the impact between being married and being single would have if I were to try and buy a house after my wife's/girlfriend's graduation. 
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Tue Jun 21, 2011 7:10 pm |
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coaster
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Well, I think your logic is sound .... as far as logic goes .... but I think you have some degree of concern about carrying a high debt load at that point, and whether or not your concern is merited and whether or not your concern is equal to the risk, so long as you DO have that concern I think it would make it easier for you to deal with if you didn't add to it with a mortgage. Waiting a few years until you're both more well-established wouldn't cause any great harm to your financial future.
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Tue Jun 21, 2011 7:16 pm |
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RobDude
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quote:
Originally posted by oldguy
Is there a chance that she could modify the dream, go to a Stste Univ (how about Ames, IA?) and get her education for <$100,000? And then, as a graduation present, you spend $10,000 and take her to her dream country for a month or so as a reward for her "senesible compromise?
Thanks for your post.
I get what you are saying; I don't think it's an option (but probably not for the reasons you'd expect).
She doesn't really care, one way or another, which school she goes to. The problem is getting accepted. Vet schools actually have a lower acceptance rate than Med schools. This is her fourth year trying to get in; she's been rejected by Iowa state twice now.
Most of the out-of-state tuition amounts in the US is every bit as high as the international schools. If we could get in-state rates; then it would be a HUGE savings. The other problem is most vet schools are in locations that significantly limit my employment options. We toyed with the idea of moving to Mississippi or Iowa (I grew up in IL so I'd love to live in Iowa for a few years), establishing residency in that state, and applying again. But it would mean delaying the start of her education for another two years (assuming she gets accepted) and possibly longer.
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Tue Jun 21, 2011 7:29 pm |
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