Hi Heather,

Thanks for all your help and all you do.  I have a question for you.  I’m not sure if I’m putting this in the right forum, but here goes. My loans total about $128,000 and are as follows:

About $8,000 Direct Loan-Subsidized

About $60,000 Direct Loan-Unsibsidized

About $60,000 Direct Grad Plus

I have qualified for PAYE over 20 years.  My payments are about $250 per month.  Hypothetically speaking, if I maintained this salary (about 70k) for the next 20 years, and continued to pay only $250 per month, with interest my total outstanding balance would be in the $400,000 range.  My question is this:  will I have to pay taxes on that $400,000 when the loan is forgiven or will I only have to pay taxes on the remaining principal (about 70k)?  If it’s the former, then what is the benefit of PAYE?

Thanks again for your help.