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Interest over your payments are waived for the first three years, after that it is capitalized. After twenty years, ten if you work in the government or charita
by bradleyjg 11y ago
Interest over your payments are waived for the first three years, after that it is capitalized. After twenty years, ten if you work in the government or charitable sector, the remaining balance is forgiven.
The current interest rate for new undergraduate debt is 4.29%.
- thechao 11y agoYou're taxed on the balance as income. It's easier to negotiate with the IRS, though.
- bradleyjg 11y agoThere are regulations that say the public service forgiveness (10 year) is not taxable income. The ordinary forgiveness (20 year) is taxable under current law, but IBR/PAYE hasn't been around long enough for anyone to have triggered it yet. There are proposals to exempt it.