Tax Law
Help for Home Buyers Likely, But Student Loan Forgiveness Could Cost More
Posted Apr 23, 2008, 10:22 am CDT
By Martha Neil
As mortgage foreclosures rise to new record highs, there is good news on the legislative front for new homeowners: Congress is working on bills that could enhance existing tax breaks.
But developing tax law could be bad news for law graduates in government and nonprofit jobs who are now benefiting from education loan forgiveness programs offered by a growing number of law schools. Actual or effective debt payments by the schools on graduates' behalf could be considered taxable income, although the issue isn't yet settled, reports the Wall Street Journal. Several law school administrators have asked the Internal Revenue Service for guidance, the newspaper notes.
Among the proposals under consideration to help homeowners are a $7,500 tax credit for first-time homebuyers and a one-year increase in the standard income-tax deduction, to allow even those who don't itemize to deduct mortgage interest.
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Posted by Not Newsworthy - 2 months, 1 week, 4 days, 18 hours, 26 minutes ago
Loan forgiveness is a viable option only at the very top schools that have well-financed programs. I went to a 2T law school, and their “loan forgiveness” program would have resulted in my take-home income at a government job being around $400 dollars a month. So, I could take a government job, I would just have to be homeless. By the way, you are eligible for loan forgiveness ONLY if you commit to a public service job for a minimum of 5 years, and often more. AND, if god forbid you enter the private sector after 4.5 years, all the loans that had been “forgiven” are back on your tab, with interest.
But none of this is new, and loan forgiveness has always been “income.” So, I don’t understand why this is problem or a question NOW..?
And as for law schools working with the IRS to do something about student loans not costing an arm and a leg, how about letting people making over 70K be able to deduct student loan interest?? 70K is not that much money, and I paid 8.5 grand in student loan INTEREST last year.
You know what, nobody gives a shit about us (hard working people whose parents weren’t rich enough to pay for our law schools), that’s my conclusion. The incentive to go to school and become a useful member of society is totally absent from the standpoint of the tax code. We’re a brilliant society.