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[aurorasandy]

I've been lurking on this thread for a while as we try to put our financial house in order to buy an actual, physical house. I'm hoping some of the wise forumites here can help with my currently dilemma.

I recently consolidated my substantial (about $125k) student loans through the federal consolidation program. When I called the feds the other day about my switch to an extended payment program, a rep told me that since I work at a nonprofit organization (private LAC) I should be on the Income Based Repayment Plan (IRB). He said that if I were to go on IRB and make 120 consecutive payments, the remainder of my debt would be forgiven.

If I switch to IRB my monthly payment goes down about $200.

However, in order to go on IRB, my husband and I would have to switch from married filing jointly to married filing separately. My husband did the numbers and said that we would pay about $4500/year more in taxes. So, theoretically, the switch would cost us about $2000/year initially, but save a ton in the long run.

Has anyone here done this? Should I be concerned that the loans will not actually be forgiven in 10 years--say the rules change or the program goes away? Is there a reason why I should not do this? (We can take the $2000 hit, but it will not be easy.) What am I missing?

[fizzg]

I would call back and check on this.  I'm on IBR, and my husband and I file together, and that hasn't been a problem. Now, I'm the primary income earner and the one with the largest student loans, and that seems to factor into their recalculation each year of what I'll be paying in the upcoming year for loans.  My guess is that you might only have to file separately if you are separating some of the calculations for income, but I'd definitely check further.

http://www.ibrinfo.org/faq.vp.html#_The_calculator_indicates
http://www.ibrinfo.org/update_marriedborrowers.vp.html