My wife and I both have significant student loans from graduate school. She is paying hers off under the Public Service Loan Forgiveness program. I am working at a for profit physical therapy clinic and am just trying to pay my loans outright in 10-12 years if possible. Her monthly payment at this time is relatively low (less than $400), but according to Fed Loans who she spoke with yesterday, if we file our taxes married jointly they will take my income into consideration as well. We were under the impression that if I had similar student loans that I am paying off, my income would not be taken into consideration and the monthly payment would remain the same. They also told her that if we file married jointly her monthly payment would go from under $400 to $1200. This does not make sense to me as my income is very similar to hers (actually a little bit less) so if anything the payment should only double (not triple). They told her if she files married separately her payment would only go up to $450 which is much more manageable. Obviously we would rather file married jointly due to the tax benefits, but if this is true about our loan payments we can not afford the large increase in her monthly payment.

What are your thoughts as to how our payments could change and how we should file our taxes?