How To Tackle Your Loans
Free Online Course- Lesson 4
This course will take you from confused and frustrated on how to tackle your student loans to a clear goal!
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What is “Income Based Forgiveness”?
If you are using an income based repayment plan to help afford your loans then after a certain time frame, you may be able to have the remaining balance of your loan be forgiven.
For example, through PAYE your loans are forgiven after 20 years and for REPAYE it is after 25 years.
However, you have to pay taxes on what remains!
IBR Forgiveness Example:
Say you paid for your student loans under PAYE for 20 years and you are now seeking forgiveness.
-Your remaining balance is for example $300,000
-$300,000 is forgiven
-But you owe taxes on $300,000
Pros and Cons of IBR Forgiveness:
-You do get loan forgiveness on your remaining loan balance
-Only have to pay 10% of your discretionary income each year (Under PAYE, REPAYE. Other programs may vary)
-You have to pay for your loans for the next 20-25 years
-After 20 or 25 years, your loans are going to accrue to a large amount and you’ll owe taxes on that large loan