Student Loan Gotcha

I guess this was obvious if you thought about it; I didn’t. What the government gives with one hand – income based repayment of student loans – it takes away with the other.

I have warned repeatedly about student loans — and in fact a good part of Leverage (look to the right if you haven’t read it yet) focuses on the rank screw job that has become our so-called “Higher Education” system.

Parents, if you’re filing FAFSA forms and signing things, you’re contributing to this.

But many people do not know exactly how bad it can get. There are some peddle the idea of what is called “IBR” (income based repayment) which is available to those who graduate — the idea being that you pay a percentage of your income (which may be zero if your income is low enough!) and then the rest of your debt is forgiven. This sounds good — good enough to suck in a few more suckers.

Well, that’s exactly what you are if you fall for it.

See, if debt is written off in the year it is written off the entire amount becomes taxable income


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