>>Anytime someone wants to hand me $200K, I'll gladly pay the tax on it.
>
>I think a point is being missed here.
>
>Someone who can't pay $250 a month (or whatever) on a 25K student loan, and winds up defaulting on it, is not likely to be able to pay the tax on what the feds will treat as earned income.

So, let's assume that our student's tax rate was at the low end - about 25% - so the tax bill on $200K forgiven is about $50K.

OK. I was an English major and arithmetic wasn't my strong suit, so please explain to me why the student would rather have to pay $200K than $50K.


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