While I agree that this is not income (and thus shouldn't be taxed as income), I also don't think its right that you can knowingly incur debt you can't pay off and expect the government to just "forgive" it after a certain amount of time. Part of the fault does like with the student. The student is taking out these loans.

The last sentence in the article says it all: "You go to school to live," he said. "You don't live to pay your debt."

So borrow, beg, or steal. You have a right to live the way you want, even if someone else has to pay for it. Magic thinking.

I think it started at $145k in 2012. He paid nothing four four years. $145k * (1.075)^4 = $194k. I don't know how he got to $220k, but I could see getting close to that.

It's saying he owed $145k at 7.5%, which accrued about $900/mo interest, as of 2012. Now he owes $220k. Even if he paid zero, though, it should have only gone up to about $194k. Now he's paying $575/mo, while accruing $1400/month interest, so the balance increases by around $800/mo. If he keeps paying $575/mo for the next 22 years, he'll owe $400k; they'll forgive the debt, and ill owe taxes on the forgiveness.

The saddest part of this is he's planning on paying $575 for the next 22 years. In 20 years, $575 will be equivalent to paying around $300 and change. He's frickin lawyer! He earns $90k. He should find a way to pay $20k a year or so to the loans, so that he's at least going the right direction. If he gets involved with boards and brings in clients, he'll double his pay to $180k in five years. Then this debt is a lot less significant. Before 22 years, he can be a partner at a good firm or have started his own firm, and whatever's left of the debt will be just noise.

His arithmetic sounds right in that he's on track to get $400k in debt forgiveness in 2038. The more important thing than that, though, is that he not plod along for 22 years doing basically the same job barely able to pay the loans. I've seen immigrants with little formal education build that much wealth over decades though hard work. A CA lawyer should not plan for a static life of paying $575/mo. That's his real problem.

Your missing the point. What the ##@*# is the IRS calling this income for. It is a fiction. No income was had. Nothing was generated, save a debt of interest. He can't go out and buy a car with it. Or start a business. It is not INCOME. The whole student loan game is for the banks, and the colleges. Not the student.

Actually the $220,000 could consist of original loan, additional loan, accrued interest, penalties, and whatever else the banks included in the contract. I can't tell from the article, so my statement above about how the balance increased could be in error.

I absolutely agree, Freedom, and what the banks are doing is sneaky as hell. I guarantee you that no student who signed those loan papers knew what was going to happen. It reminds me of insurance companies and health insurance; government and insurance companies hand in hand to defraud all of us.

The banks are the ones getting the "free" ride.

Disclosure: I paid my student loan in full with interest.

That caused the crash of 2008.

Too much imaginary money, and not enough people making real money.

It's easy to see why so many people today expect a free ride in life.......

Sorry to disagree with you, sort-of ;^)
Why is he not paying it down?
Same reason why south american countries who took out loans from US banks didn't. The interest rates are unreasonably high compared to the cost of the money to the lenders.
The banks collected lots more in interest than the principle they loaned to the SA countries, and then they got the US taxpayers to cover the banks "loss" of the principle balance. that is on credit (the principle) that the banks created from nothing. No it wasn't the banks investment capital, it was created from nothing.
The same thing is being done again on the student loans. Banks are paying near zero interest to their depositors, and creating the student loans at no cost. Then they are charging the borrowers 8% interest and adding any shortfall of payments to the principle. That's why the loan principle is now $220,000 when it was $145,000 when it was borrowed in 2012. In the end, the "debt" is forgiven after the bank has received millions in interest, and the fedgov gets a payoff in income taxes. The article doesn't say if the bank forgives the loan, but my guess is that the taxpayer gets stuck with paying the bank for the "loss" that isn't a loss.

Yes, the students agreed to the contract. They are responsible for that action.
I guess it's true that even law students have trouble with math.

Why not do the same thing with mortgages? Buy a super expensive house you can't afford, pay on it for 25 years, and whatever is left over the government can take care of.