re: Future Tax/Investment Question

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There's really only two routes, try to pay them off or IBR out to 25 years then pay the tax on the forgiven amount. At a certain point, the latter looks smarter than the former, but I'm trying to get all the info I can since its a unique scenario than what people were seeing 15 years ago when some of these rules became gospel.

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Here is some food for thought.

1) If you are under an IBR, most of your monthly payment is going to interest. That interest may or may not be tax deductible currently and in the future depending upon your earnings.

2) Your tax rate on ordinary income at the time of forgiveness will probably be higher than the tax rate is now.

3) Inflation will cause the amount of loan forgiveness in 20 years to be less in real dollars than the debt is worth today.

4) You can pay $1 in today's dollars to go toward debt. Or, you can pay 45 cents maybe in future dollars if the debt is forgiven.