Need financial advice: student loans?

I owe 106K on undergrad loans. Each year I keep them in forbearance and interest builds. If I started paying today, I will owe ~1200 per month for the next 30 years. I'm 40 years old now, and the loans need to be paid before I'm 55.

I cannot afford to pay 1200 and still expect to support my own family.

The Dept. of Education tells me that the unpaid balance will convert to taxable income when I'm 55 (which is obviously less than 30 years away!)

Is it cheaper to keep my loans in forbearance, and deal with the tax burden on reportable income of 200-300K when the student loans shift over to the IRS?

Need financial advice: student loans?

Wow, you really screwed the pooch by not starting to pay these when you should have. You're going to be lucky if you ever get to retire, based on this stupidity. I know people (people with Doctorates, not just undergrads) that ran up totals similar to yours (how did you get so high with undergrad loans anyway, expecially given your age, which would imply that you went to college back when it cost a lot less???), and they started paying on their loans like they shoudl have, and will not have problems like you, fortunately.

Anyway- I think that you are stating the problem wrong, somehow. How can a debt convert to taxable income? They arent going to pay you 106K and then tax you on it. So what you are saying makes no sense- or maybe Im just reading it wrong. Anyway, I would suggest starting to pay as much as you possibly can every month- you are allowed to do that while in forbearance. Then when you get turned over to the IRS, at least the hit will not be as bad, and you will be less likely to end up in jail.

Need financial advice: student loans?

they will eventually garnishee 30% of your wages, so they say. watch payments i paid mine twice

Need financial advice: student loans?

Have you tried deferment? Deferment may allow the balance to sit and not collect interest. You can do this if you have financial hardship (sounds like you might). They won't let you if you have defaulted in the past.

With $106K in student loans, it sounds like you have a professional degree (doc, lawyer?). Normally, someone in those fields would make enough to pay the loan. Did that not happen for you? If you are a doc or lawyer, perhaps your lifestyle prohibits you.

I would try to pay these off. Yes, it's a big hole, but see what other areas you can trim. Do you drive a car with a big payment? Sell it and drive a car that you pay cash for. That would help free up some cash flow.

I would read Dave Ramsey's Total Money Makeover. It's all about getting out of debt. HIs radio show is definitely worth a listen as well. He has had others call in in worse of a situation than you, and you may find it inspiring.

Best of luck to you...

Need financial advice: student loans?

Have a look here.

Need financial advice: student loans?

Do you own a house now? If so, call your bank and considate your student loan debt into the house and pay it off that way.

If you don't own a house, you may want to stat investing in real estate so you can get the highest returns on your investment and use the money to pay off your student loan debt.

If you don't want to do real estate, you should look into a career or side business that is going to pay you more money so you can start sending in chunks to pay this debt off because it will haunt you for the rest of your life. You don't to mess up with those student loan folks.