If you’re going for loan forgiveness in 20-25 years, please be aware that any remaining balance at the end of this term will be added to your taxable income.
Example: let’s say you are making $150,000 25 years from now and you have $90,000 in student debt being discharged.
Well guess what…
Your income for the year is now $240,000.
Using the Trump tax reform rates, that extra $90,000 unexpectedly dropped a tax bomb of $29,400 on this borrower’s lap.
The key here is to make sure you have a savings plan in place today to pay the tax bill later on.