4 ms·

> If after several years you don't repay it, it is wiped clean. What a deal. I had to check this as I had not heard of that before. "Several years" is 25 years

by sedachv 10y ago

> If after several years you don't repay it, it is wiped clean. What a deal. I had to check this as I had not heard of that before. "Several years" is 25 years under income-based repayment (years before you switched to income-based repayment do not count). The loans are not "wiped clean" - whatever balance is forgiven after 25 years is counted as taxable income, so actually you would be in a worse off position after getting your loans forgiven. Source: http://www.finaid.org/loans/ibrfaq.phtml http://www.finaid.org/loans/ibrfaq.phtml All this of course only applies to federal student loans. About half of my wife's loan balances are from private lenders and from what I hear this ratio is common.

massysett 10y ago
How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? It would all be due at once (offhand I don't know what sorts of payment plans IRS has) so it could be worse that way.
- sedachv 10y ago
  > How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? The IRS is much more aggressive about collections and will seize your property and garnish your wages: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien https://www.irs.gov/businesses/small-businesses-self-employe... https://www.irs.gov/businesses/small-businesses-self-employed/levy https://www.irs.gov/businesses/small-businesses-self-employe... When that 25 year forgiveness kicks in the tax money will be due all at once. Even with a payment plan the IRS collection schedule is 3-5 years. 30% of a lot of fake income is still a ton of money. This "debt forgiveness" will force a lot of people into bankruptcy, which btw does not discharge all tax obligations (http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-irs-collecting-tax-debts.html http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-...)

by sedachv 10y ago

massysett 10y ago

How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? It would all be due at once (offhand I don't know what sorts of payment plans IRS has) so it could be worse that way.

sedachv 10y ago
> How is paying a percentage of the loan balance as taxes worse than paying the entire loan balance? The IRS is much more aggressive about collections and will seize your property and garnish your wages: https://www.irs.gov/businesses/small-businesses-self-employed/understanding-a-federal-tax-lien https://www.irs.gov/businesses/small-businesses-self-employe... https://www.irs.gov/businesses/small-businesses-self-employed/levy https://www.irs.gov/businesses/small-businesses-self-employe... When that 25 year forgiveness kicks in the tax money will be due all at once. Even with a payment plan the IRS collection schedule is 3-5 years. 30% of a lot of fake income is still a ton of money. This "debt forgiveness" will force a lot of people into bankruptcy, which btw does not discharge all tax obligations (http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-irs-collecting-tax-debts.html http://www.nolo.com/legal-encyclopedia/will-bankruptcy-stop-...)