Along these same lines, something else that may not be common knowledge: there a few different kinds of student loan forgiveness. One is working for a governmen

Along these same lines, something else that may not be common knowledge: there a few different kinds of student loan forgiveness. One is working for a government or non-profit for ten years. That kind of forgiveness comes with no tax debt. However under various income driven payment schemes (IBR, ICR, PAYE, REPAYE) there is forgiveness after 20-25 years (depending on the program and sub-program). Under tax law that forgiveness is taxable income to the borrower. Consider someone that went college and grad school, ended up with hundreds of thousands of dollars worth of debt by age 25 at an average rate over 5%, could easily be paying 10% of income after 150% of poverty line for 25 years, still end up with a principal of double or more than they started with. Since the income that year would be several hundred thousand dollars, he'd be in a high tax bracket and could easily owe more in taxes on the forgiven debt than he borrowed in the first place. In cases where a taxpayer can clearly not pay a tax debt the IRS will generally work out a 10 year payment plan based on the most they think you can afford to pay and then forgive the remaining amount. So by age 60 our not so hypothetical borrower will finally be free of his student loans.