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options2825

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Do I pay taxes if I pay student loans based on income after 25 years? I'm taxed on balance, right?
If my balance after 25 years is 200,000, How can I possibly pay taxes on that amount? Will this payment way improve credit? Loans die with me, right? Thanks.

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You MIGHT have taxes owed if the loans are forgiven and the balance is declared 'other income', then you would receive a 1099.(whatever the letter is) that would have to be filed with a tax return.  Any unpaid student loans on your death MIGHT be a debt owed by your estate.  These things are very complex..

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Yes, unfortunately you will have to pay taxes on the amount forgiven under the federal government's income-driven repayment plans. The forgiven amount will be treated like ordinary income. That is one of the big disadvantages of these type of programs. They help to lower your monthly payments, but your interest continues to grow and compound over that period of time. You can learn more about this at https://www.studentloansguy.com/income-based-repayment/. For taxes, if you have $200,000 forgiven and fall under the 30% tax bracket, you would have to pay $60,000 of that in taxes. 

The Public Service Loan Forgiveness program allows people to have their federal loans forgiven (tax-free) after ten years of payments. However, you must have worked for a qualifying non-profit company or the federal government and made on-time monthly payments over the course of that ten year period. 

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