Options to pay a student loan I can no longer afford monthly payments on?

[sjshro423]

I can cash out my IRA, my 401k, or change my status to married filing separate. No longer working full time due to pregnancy and cost of childcare, husband's income is roughly $80k so not eligible for any government assistance if that matters. There is just nothing left to pay this loan once all the other bills are paid even when looking at income driven repayment plans based on his income. My income for 2017 was $14k and will be less going forward the next 6 years. I unfortunately didn't understand the consequences of borrowing money as a young student.

[AmandaR1]

Call your lender/loan holder. If your loans are backed by the government, then they have income based repayment programs. This forum can't help you because this is for taxes. None of the tax actions you listed will help you with your loans.

[Carl]

Generally, there are only two ways I'm aware of that a qualified student loan doesn't have to be paid back.
 1) the borrower is found to be totally disabled and unable to work. (If that status changes later in life, then the loan is un-forgiven and has to be paid back.)
 2) The borrower dies. (If there's a co-signer on the loan still living, then the co-signer is liable for the loan.)

[Opus 17]

We can't really give advice on this type of situation.

If you file as married filing separately, you may qualify for IBR on your own income alone.  However, this will reduce or eliminate certain deductions and credits on your spouse's separate return compared to filing jointly, and may increase your taxes owed.  IBR also delays repayment but the interest owed continues to grow.

You may also qualify for forbearance, or to refinance over a longer term.  You may be able to refinance with a private student loan lender even if you don't qualify for federal assistance.  But watch out for high interest rates and predatory lenders.

Any money you withdraw from an IRA or 401(k) will be subject to regular income tax plus a 10% penalty for early withdrawal.  Paying a student loan is not an exception to the penalty.  It should really be the last resort.

You may be able to borrow from your IRA or spouse's 401(k), and the interest rate might be lower or you might get a longer term to pay back the loan.  (You can't borrow from your own 401(k) unless you still work for the employer.)

(**Incidentally, if you stopped working for the 401(k) plan sponsor, you might want to transfer that money to a private IRA.  You will have more options for withdrawing or investing the money.)

Student loans are not dischargeable in bankruptcy, so that probably won't help you unless you have other debts that could be discharged, which would free up money for the loan payments.

You may need to consult a financial advisor in your area.  Again, please be careful about predatory student loan lenders.

[Opus 17]

If you are "church people" (and even if you aren't), you might want to look for a local church that is offering Dave Ramsey's class on financial responsibility.  With an income of $95,000, I suspect there are adjustments you could make in your lifestyle that would make your loan payments more affordable.