Let's get a more interesting situation.
Say you have a consolidated student loan of about 200K with an interest rate of 7.1%.
IBR payments are a few hundred (~300) a month. Each month paying at this rate, at least $800 in interest builds up. So in theory, you have to make at least 800 more a month in payments just to service the debt for 25 years to pay it off. Budget is tight, and the best you can do is make minimum payments for 25 years servicing the debt at full minimum payment which is about $1,100 month under this scenario.
However, you could just pay IBR for 25 years, and take the $800 in savings every month and put it in 401k, Roths, actually go on vacation once in a while and not kill yourself, etc.
After 25 years, the debt is forgiven, except I THINK with IBR you pay a tax on the forgiven amount, which would be something on the order of half a million dollars.
Taking away any moral superiority, purely financial decision.
What do you do?
This post was edited on 1/7 at 11:50 am