How does America address an unprecedented depression amid a presidential transition?
In 2008, the Obama administration prepared to inherit a rustic within the throes of economic catastrophe. President George W. Bush announced an $80 billion bailout and said that the “government features a responsibility to safeguard the broader health and stability of our economy.”
Bush explained that not helping auto manufacturers would “lead subsequent president to confront the demise of a serious American industry in his first days in office.” The incoming Obama administration picked up where the Bush administration left off.
The us now finds itself in yet one more economic calamity, and student loans appear to be a viable target for economic recovery – one that targets millennials who are still recovering from the last recession.
This could be President Trump’s capstone on injecting cash into a struggling economy.
The Trump administration has led the charge on student loan relief before Congress acted. On March 20, every week before the Coronavirus Aid, Relief, and Economic Security Act was passed, the administration took steps to suspend student loan payments and set interest rates to zero percent.
Secretary of Education Betsy DeVos said, “I commend President Trump for his quick action on this issue, and that i hope it provides meaningful help and peace of mind to those in need.”
Graduate Tuition Waivers Will Be Taxed
Graduate students usually get jobs at their university in exchange for a tuition waiver. These grads are usually managing on research, teaching in a classroom, and working to earn their graduate degree at the same time. The school will waive a part of their tuition, usually into the many thousands of dollars for their effort. The IRS does not view that tuition waiver as taxable income. For a graduate who makes a $25,000 tuition waiver and is in the 12% tax bracket, this would end in a tax bill of $3,000 dollars, while they may not even have an actual income. These are students working full time to get that waiver but may not have any actual income.
Private Student Loan Consolidation
Private student loan consolidation is available through various banks we work with to combine all your student loans into one new loan. Private student loan consolidation requires a good credit score and will often have better rates than the federal student loan.
American Opportunity Tax Credit Improved
The American Opportunity Tax Credit has been renewed by the Tax Cuts & Job Act. This is one of the major big deductions for student loans that allows up to a $2,500 deduction for fitted education costs for the first 4 years of higher education. The IRS reports show that 9m Americans used for this tax credit last year. The Tax Cuts & Jobs Act has raised the allowable deduction time to five years rather than four, except the fifth year is at a decreased $1,250 deduction. The deduction is measured as being 100% of the costs incurred up to the first $2,000, and then it’s 25% of the next $2,000 for a maximum of $2,500.
Lifetime Learning Credit Being Axed
This turns into a deduction of up to $2,000, which could be done for many years as you had education expenses. The big separation between the American Opportunity Tax Credit & the Lifetime Learning Credit is the latter allows for deductions based on vocational costs. By eliminating this tax credit it is harming those who want to develop their skill and gain valuable hands-on training in a field that may not be available at a traditional university
What should borrowers do, if Trump & DeVos would take Public Service Loan Forgiveness away?
For borrowers who are suited for PSLF, instantly guarantee that your loans are in the Direct Loan Program (consolidate your loans as important)
If you are in the Direct program (and suitable for PSLF) verify your employment status instantly.
These moves alone will not ensure that borrowers will get PSLF, but being in the program prior to any law reforms is expected to develop your chances of getting it considerably.