Does income-based repayment provide the lowest monthly payment?
For most borrowers either income-based repayment or extended repayment will provide the lowest monthly payment. Generally, borrowers who have low income compared with their debt will have a lower monthly payment under income-based repayment, while borrowers who have low debt compared with their income will have a lower monthly payment under extended repayment. • Is the loan forgiveness taxable? The 10-year public service loan forgiveness is not taxable under section 108(f) of the Internal Revenue Code because the forgiveness is restricted to borrowers who work in specific occupations. However, the 25-year forgiveness for borrowers who don’t work in public service careers will represent taxable income to the borrower under current law. See Taxability of Student Loan Forgiveness for additional details.
