student loan??

[tsawyer]

My wife is done with school and back to work. We are a family of four. If we file our taxes married jointly our payment is WAY higher than if we file married separately. This loan is going to be written off after ten years (social work degree). We've always filed jointly, is it worth it to file separately or will we screw ourselves????

[neguy11]

I assume she will be taking advantage of the Public Service Loan Forgiveness? You really need to read the following page:

FinAid | Loans | Public Service Loan Forgiveness

This part stood out to me:

Eligible Repayment Plans: Borrowers may use income-based repayment, income contingent repayment, standard repayment or a combination of these repayment plans. Payments made under other repayment plans (e.g., extended repayment and graduated repayment) do not count. To maximize the amount of forgiveness, borrowers should use income-based repayment. When income-based repayment is not available (e.g., prior to July 1, 2009), they should use income-contingent repayment.

If a borrower were to use only standard repayment for repaying their loans there would be no balance remaining after 10 years and so no debt to cancel. Standard repayment is only provided as an option to address situations when a borrower is unable to continue under income-based repayment because they no longer have a partial financial hardship and the payments under income-contingent repayment exceed standard repayment. In such a situation the borrower would use standard repayment for the remaining payments and obtain some loan forgiveness at the end of the ten years of payments.

Married filing separately seems like quite a hassle to me, but it may be worth it in the long run. Here's the problem...the income based repayment options are just that, based on income. Will your wife's income likely increase in the next 10 years?

[Mike75]

I think you should file separately as it will cost you less and save you money. This might take more time and you may even have to do some explaining to the IRS officers but in the end, it is a better option.