<p>At the end of the 20-25 year IBR period the debt just doesn’t magically disappear… it is “forgiven” but that amount is treated as income for tax purposes and you’ll owe, potentially a lot, of additional tax that year. You need to read the fine print. </p>
<p>If someone had big law school debts and used the IBR to avoid making significant dents in principal for 20 years their debt could easily baloon well into the mid six figures. When the loan is finally “forgiven” said indivdual owes income tax on that lump sum amount–potentially more in income taxes than they even earn that year. At this point you could be totally screwed. </p>
<p>There’s no free lunch here people.</p>