Student loan forgiveness programs can be helpful to many students who struggle under a mountain of debt. Attempts were made by the Obama administration to ease the burden somewhat, but the epidemic continues to get worse. 44 million U.S. citizens carry over $1.5 trillion worth of debt.
Despite these astonishing numbers, the Trump administration came out swinging for the financial instructions. The student loan watchdog, who protected students from scams, abruptly resigned. He cited in his resignation letter that the federal government no longer cared about struggling students.
This news can be unsettling for students. New student loan forgiveness laws were within reach, but the Trump administration seems hellbent on destroying them. Thankfully, in signing the latest budget for 2018, Trump was able to compromise and leave current laws in place. How long they will last, no one truly knows.
One Positive Change for Student Loan Forgiveness
It’s important to note that while Trump targeted these laws, he hasn’t done anything negative yet. Proposals aren’t law, so students should continue watching what’s going on. Financial Helpers is available to help you in this process. All it takes is one phone call to see if you qualify for student loan forgiveness programs. Our team is made up of debt experts who will take you through your list of options and get you on the path towards financial freedom. Give us a call at the number below:
Despite showing a willingness to cut programs to save money, President Trump made one big positive move in the right direction.
On January 1st, 2018, Trump’s Tax Cuts and Jobs Act went into effect. If it’s one thing the president has been great at, it’s been helping to grow the economy. The Tax Cuts and Jobs Act has done precisely that. It cut a lot of red tape, regulations, and taxes for business owners. Even small businesses have benefited tremendously from this law.
This law also helps those seeking student loan forgiveness. It made the death and disability discharge tax-free for students. Why is this important and how does it help? Let’s take a look at what it does and the advantage it gives students.
What is the Death and Disability Discharge?
Under current student loan forgiveness laws, you’re able to have your loans wiped away under specific qualifications. For example, if you end up permanently disabled or die, your loans are forgiven. It’s as simple as that. However, other types of disability aren’t as clear-cut, and forgiveness can be more difficult to obtain.
According to the Department of Education, you must prove your permanently disabled, as some disabilities can be temporary. Here are some of the guidelines:
• If you have any impairment related to service in the military. The Department of Veterans Affairs will have to certify you’re 100% disabled and unable to work.
• If you receive Supplemental Security Income or Social Security Disability Insurance and your new review is 5-to-7 years out.
• You have a doctor who certifies that you are 100% disabled and your condition will last longer than 60 months.
http://financialhelpers.com/trump-administration-signs-massive-student-loan-forgiveness-bill/
These are conditions that will make it nearly impossible for the student to repay their loans so that the government will give them a pass. What they may not realize is, having debt forgiven is considered taxable income.
Tax Implications of Student Loan Forgiveness
Any forgiven debt, including student loan debt, is considered by the government to be income you didn’t earn. You’d have to fill out a 1099-C and report it as such. It can raise the amount of taxes you owe by tens of thousands of dollars, depending on how much you had forgiven. This is a significant obstacle for anyone with a disability.
Worse yet, under the Parent PLUS Loan, parents who have a child die can have their loan forgiven. That sounds great, but the parents would still be on the hook for paying the tax hit that comes with it.
President Trump’s Death and Disability Discharge provision in the new law is a win for borrowers. They will receive student loan forgiveness that’s tax-free, so they aren’t suffering from thousands in extra charges. This problem is massive in another way: disabled people can lose their benefits if they have additional income.
Disabled individuals often receive both state and federal benefits to help with care. If they were to have their student loans forgiven suddenly, that would count as income. That much ‘income’ reported could cut their benefits altogether. This law is incredibly helpful for those in need of assistance.
