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Hi,
I am paying under an IBR plan and not quite covering the interest with my monthly payments so have growing interest in addition to my unchanging principle. As far as IBR goes, will interest be forgiven at the end of the 25 yr period or is only the principle forgiven? If the interest is forgiven as well is there any benefit to paying more to cover or eliminate that interest?
Thanks
Both the interest and principal are forgiven…but be careful anything that is forgiven under an Income Driven (IBR, ICR, PAYE) plan will be taxable to you via 1099-C. Meaning if your normal income you pay taxes on is 40k and you have 50k in loans forgiven your income you are paying taxes on that year will be 90k.
Heath Hullihen\nwww.studentloaninsider.org