Heater,

I know this question has been asked, and the answer appears to be yes, the amount is taxed, but in a recent post you mentioned that you were consulting a tax attorney about this. Any updates?

Anyone know how difficult it is to qualify as “insolvent,” and thus, not have to pay the tax on the cancelled/forgiven amount?

Thanks!

Right now, 25-year IBR forgiveness is considered taxable as income but there is a bill pending to change that.  There hasn’t been any activity on it lately and I can’t say I expect Congress to move on it (or anything else, jeez) any time soon.

I don’t have a clue about the insolvency thing but it’s an excellent question.  I’ll see if I can drum up some research on that.