I’m 72 And Wondering if The IBR is the Smart Thing to Do


Hi, Steve,

I have been diligently reading your column for years and saving some material relating to seniors with student loan debt. I will be 72 next month and am still working and getting social security. I have been managing my ever increasing student loans with the most current strategy IBR. I am 7 years into that process.

Discouraging because I consolidated loans 16 years ago with 7.75% and can never get a lower rate. So my $68,000 in loans in 1999 is now $110,000 and increasing every year. Some comfort in knowing that death should satisfy my loan.

1. In an answer involved in this issue, you said the IBR should be satisfied after 20 years? I thought it was 25 years.

2. When it is satisfied after 20 or 25 years, will I owe income tax on the forgiven amount?

3. Upon my death, likely with student loans still intact, will my home or estate be at risk? In other words, will my heirs have to pay anything? Thanks so much for your help.



Dear Jade,

Thank you so much for being an awesome reader. You rock!

The year difference in repayment is confusing for sure. It is 20 years if you were a new student loan borrower after July 1, 2014. Otherwise it is 25 years. Us old farts get screwed again. LOL.

As it stands now, you will owe income tax on the amount of debt forgiven up to the point where you become insolvent. So let’s say your loan balance is $200,000 and you have $75,000 in assets, you’d pay income tax on $75,000 of the forgiven debt. You need to look at IRS Form 982 for more information on this. Some people think Congress will fix this forgiveness liability problem. I’m not so confident. They’ve had ample opportunity but kicked the can down the road. They seem to be good at that.

Your federal student loans will expire when you do.

Frankly, I’d just stay the course, keep your IBR up, and think about consulting with a tax advisor at some point regarding how to minimize your tax liability if you think you’ll live to the wonderful age of 90.

I completely agree the IBR is discouraging when you look deeply at it. In essence the government gives us a payment we can afford while exploding the balance we can’t afford. It is a totally stupid program but in many cases it’s the best option many have for monthly payments they can’t afford.

Otherwise, go have some fun and don’t worry about it.

Steve Rhode
Get Out of Debt GuyTwitter, G+, Facebook

If you have a credit or debt question you’d like to ask, just click here and ask away.

This article by Steve Rhode first appeared on Get Out of Debt Guy and was distributed by the Personal Finance Syndication Network.