http://www.ibrinfo.org/

Basically a new plan for paying student loans. The max you can pay is capped based on your income. After 25 years, anything left is forgiven, but you will have to pay income tax on that. If you do certain public service jobs, it's just 10 years.

Our current situation has me making the money (full-time regular job plus online selling) and my wife's making maybe 2k a year as a part-time preschool teacher. With 2 small kids and another on the way, not likely she'll be doing more any time soon.

So I started playing with the numbers. Based on a couple online quickie tax estimators, we'd pay about 3k a year MORE if we filed married filing sep instead of joint. However, she's got 65k in med school loans (didn't finish med school due to kids and not liking it any more). Right now we're on the ICR (income contingent repayment plan) paying about 300 a month on it. If we switched to this IBR plan, we'd pay close to the same, maybe a little less (not sure how much the ICR plan changes w/ another kid). However, if we switched to filing sep on the taxes, she'd pay ZERO on the loans, saving like 3600 a year. Net then is $600 in savings a year. After 21 years though, we'd have to pay income tax on the 65k that'd be written off. About a break even over time then, but if we banked the 600, it'd be worth it. (we'd only have to be on the new plan for 21 years cause the 4 years we've been on ICR count towards the total).

And of course, what are the odds of them actually making people pay income tax on the forgiven loan amounts? Anyone not making enough to pay their loans back in 25 years won't be able to pay that lump sum of taxes, so there will be lots of screaming if they try.