‘Post-tax income will be barely enough to pay the loans, mortgage and childcare.’ We are both doctors but have $472K in student loans. What should we do?

Question: I have $237K in loans and my wife has $235K in loans. We are not currently making any payments [thanks to government relief] but when that restarts, we will both owe $3.3K/month with 6.7% interest. We’re both physicians who went to state school, and we just started our first jobs. I am in private practice and my wife works for a non-profit organization. If she keeps this job, can she theoretically get her loans forgiven under the PSLF program? Or do I refinance her loans or continue to make 120 payments for the option to get forgiveness? In my case, do I refinance my loans for a lower rate (readers, you can see the lowest student loan refinancing rates you may qualify for here) or keep the loans with the government in hope of partial or full forgiveness? We just started a family and bought a house. Post-tax income will be barely enough to pay the loans and mortgage and childcare. What should we do?

Answer: Let’s first tackle your loans. You may want to consider refinancing if the rate is attractive, says certified financial planner Matthew Jenkins. (Readers, you can see the lowest student loan refinancing rates you may qualify for here). But proceed with caution. “Unless you’re planning to utilize an income-based repayment program, then the lower rate on a private loan could help. As you mentioned, it’s possible that the US government will forgive some portion of federal loans, but it’s not very likely,” says Jenkins. However, note that refinancing is “not always the best option if you have federal student loans since you will give up all protections and opportunities for forgiveness, but refinancing could help you pay off your debt faster and save money with a lower rate,” says Anna Helhoski, student loan expert at NerdWallet. 

Have a question about getting out of student loan or other debt? Email [email protected].

Now, let’s tackle your wife’s loans. First, get to the bottom of her eligibility for PSLF forgiveness by visiting the Student Aid website or calling 1-800-433-3243 — and, says Jenkins, if your wife is eligible for PSLF forgiveness, don’t refinance her loans. “The success rate of PSLF applicants has increased in recent months and there is hope that it could continue to improve in the future,” says Jenkins. 

If your wife is available for PSLF, follow the program’s rules to keep on it. Borrowers who are working for a public service or nonprofit  employer should stay on track toward forgiveness by certifying employment regularly, says Helhoski. “That means, annually submitting the PSLF application and employment certification form. You [typically] must have a federal direct loan and be enrolled in an income-driven repayment plan to qualify,” says Helhoski. But, there’s currently a waiver in place that’s available through the end of October that would count payments that were previously ineligible. “You must submit a PSLF form to ensure any past ineligible payments would now be counted. It takes 10 years worth of payments while working for a public service employer to achieve student loan forgiveness,” says Helhoski. 

You should also both examine your spending and see where you might make cuts.  “Between high levels of debt and I’m guessing zero retirement savings, you’re effectively mortgaging your future, a recipe for sleepless nights and marital spats,” says Lisa Weil, the principal and founding member of Clarity Northwest. That said, you can lower that burden. Consider contributing to your retirement accounts, especially if your companies will match your contributions. Utilizing an automated savings feature can help put money directly from your paycheck into a separate savings account. Setting up small recurring transfers from your checking to your savings can also help you save small amounts that will add up over time. 

*Question edited for brevity and clarity.