On November 16th, 2017, the House of Representatives passed the Tax Cuts & Jobs Act. Within the 429 page document, there are changes made to existing laws that would significantly affect current students, those with student loans, as well as parents who have dependents on their taxes currently in school.  Please note that this has not yet passed the senate so it’s yet to be seen whether it will actually become law or not.
Interest DeductionOne big change presented in the Tax Cuts & Jobs Act is that interest deductions for student loans are being wiped out starting in 2018. Currently, if you are earning under $65,000/yr as a single, or $130,000/yr if you are married and filing jointly, you are eligible for an interest deduction on your student loans of up to $2,500.  IRS records show that in 2015 there were 13.4m people who claimed that deduction and the average deduction was $1,100.  For someone in the 25% tax bracket, that would translate to a reduced tax liability of $275.  It’s not a huge amount, but for a struggling individual out of college trying to make ends meet, every dollar matters.
*This was removed from the final version of the law that was passed.
Graduate Tuition Waivers Will Be TaxedGraduate students often take up jobs at their university in exchange for a tuition waiver.  These grads are often working on research, teaching in a classroom, and trying to earn their graduate degree at the same time.  The school will waive a portion of their tuition, most often into the many thousands of dollars for their work.  Currently, the IRS does not see that tuition waiver as taxable income.   Beginning in 2018, it would.  For a graduate who earns a $25,000 tuition waiver and is in the 12% tax bracket, this would result in a tax bill of $3,000 dollars, when they may not even have an actual income.  These are students working full time to earn that waiver but may not have any actual REAL income.
*This was removed from the final version of the law that was passed.
American Opportunity Tax Credit ImprovedThe American Opportunity Tax Credit has been improved by the Tax Cuts & Job Act.  This is one of the more popular deductions for student loans that allows up to a $2,500 deduction for qualified education expenses for the first 4 years of higher education. The IRS data show that 9m Americans applied for this tax credit last year.  The Tax Cuts & Jobs Act has increased the allowable deduction period to five years instead of four, but the fifth year is at a reduced $1,250 deduction.  The deduction is calculated as being 100% of the expenses incurred up to the first $2,000, and after that it’s 25% of the next $2,000 for a max of $2,500.
Lifetime Learning Credit Being AxedThe Lifetime Learning Credit is being repealed, which allows a credit offset of 20% on the first $10,000 of your education expenses.  This translates into a deduction of up to $2,000, which could be used for many years as you had education expenses. The big difference between the American Opportunity Tax Credit & the Lifetime Learning Credit is that the latter allows for deductions based on vocational expenses.  By removing this tax credit it is hurting those who are looking to improve their skill and gain useful hands-on training in a field that may not be available at a traditional university
If Trump & DeVos take Public Service Loan Forgiveness away, what should borrowers do?

• For borrowers that are eligible for PSLF, immediately ensure that your loans are in the Direct Loan Program (consolidate your loans as necessary)
• If you are in the Direct program already (and eligible for PSLF) certify your employment status immediately.

These steps alone will not ensure that borrowers will receive PSLF, but being in the program prior to any law changes is likely to improve your chances of receiving it greatly.
Based on what Trump has said so far, here are his other most concrete views:(Please note: NONE OF THIS IS LAW YET.  There is no program with the name “Trump Student Loan Forgiveness.” This is simply keeping readers up-to-date on Trump’s latest views on student loan forgiveness.)

• Trump wants to consolidate all current repayment plans into a single Income-Based Repayment program (IBR). This would result in students paying 12.5% of their income toward their loans each month and receive total loan forgiveness after 15 years.
• He has made plans to cover increased forgiveness amounts (and the higher cost to taxpayers) due to shorter repayment terms by lowering federal spending accordingly.
• Trump promises to scale back funding significantly for the Department of Education.

​Here are the other stances the Trump administration has taken:

• The government “shouldn’t be making money on student loans”—the logical/only fix to this would be to lower the interest rate for federal loans going forward
• Eliminate the Public Service Loan Forgiveness program (in favor of putting all borrowers into a single IBR)
• Push colleges to cut tuition by reducing large administrative costs
• Reduce federal regulations on colleges to reduce their compliance costs so they can pass those savings along to students
• Universities will be required to spend all of their endowment money going forward on their students (instead of “hedge fund managers”) to keep tuition low and cut student debt or risk losing their federal tax breaks
• Possible tax-exempt status for large university endowments if schools don’t start making their degrees more affordable for students

If he does change the IDR program as he has suggested, those interested in Income-Driven Repayment plans would have a higher monthly payment, BUT forgiveness would occur sooner.
Here are the big outstanding questions:

• No mention of tax implications on forgiven student loan amounts
• No mention of bankruptcy reforms

So how will this affect your student loans going forward? And more importantly, what should you do about it?
Recommendations for Borrowers:1) Trump is clearly in favor of a single IBR program going forward, which will have a shorter forgiveness period than the version currently in place. If you are in distress or default on your loans, enroll in a current Income-Driven Repayment program (or a loan rehabilitation). If you’re not, it may be best to wait and see what develops with Trump’s stated new version before you enroll. The shorter forgiveness period may end up saving you money over the long-term.
2) Make sure to stay current on your student loans payments and out of default status. This is important because, in the past, new student loan programs have been more difficult for those in default to enroll in. Keeping your loans in good standing is the best way to keep your opinions open going forward.
3) At this point, there is no real knowledge available about how Trump’s student loan policies will affect private loans, if at all. This being the case, it may be best to simply to wait and see what develops. This may offer an opportunity to take advantage of better options in the near future.
Obviously, there are still a lot of questions in the minds of student loan borrowers about how Trump’s future policies will affect them. Rest assured that as things develop, Student Debt Relief aims to provide student borrowers with the most up-to-date information and guidance.
Common Questions:Will Trump forgive my student loans?
While nothing is set in stone, it seems very likely that whatever program Trump implements will have an end of term loan forgiveness as a component. His most recent thinking is forgiveness would be after 15 years of payments.
How do I get signed up for student loan forgiveness?
Make sure your federal loans are enrolled in the direct loan program. If they are not, consolidate them into the direct loan program. If they are Stafford loans you may want to see if you qualify for any of the Stafford forgiveness programs. Here is a complete guide to student loan forgiveness.
Will Trump lower my student loan payment?
You likely don’t need to wait for Trump to lower your payment, you may be able to lower your payment today. Look at Income-Driven Repayment programs and/or private loan consolidations today. Based on his statements so far it is likely he will continue the Income-Driven Repayment program that helps borrowers lower their payment to a manageable size.
Will Trump lower my student loan interest rate?
So far he has not made any definitive statements regarding interest rates, but he has said the Department of Education shouldn’t profit from student loans. One way to make sure they are not profiting would be to lower the interest rate.
Will Trump do away with the Public Service Loan Forgiveness?
He has not stated this directly. However, he has said that he wants to roll all current federal student loan programs into a single Income-Based Repayment program. One can only assume that this would include the Public Service Loan Forgiveness program as well, but this is by no means certain.
Trump’s cancellation of student loan protections may grow the federal government’s involvement.Under the Trump administration, the Department of Education has removed Obama era protections for student loan borrowers who want to rehabilitate their loans.
By making rehabilitation of privately held loans less attractive, borrowers are more likely to opt to skip rehabilitation and immediately consolidate their FFEL loans into the Federal Direct Loan Program to take advantage of income-based repayment programs.  When borrowers take this action, it moves loans from private balance sheets to the federal government.

Attending college as a parent can be a daunting affair: It’s hard to find enough hours in the day for work, family, and school. Many institutions do not offer any child care and classes may only be available at inconvenient times. For many student-parents these stresses are too much to handle; only one-third of undergraduate parents finish a credential within six years of enrolling.
Now, new data show another challenge for student-parents: repaying their federal loans. The analyses presented here show that almost half of student-parents who began college in the 2003-04 school year and borrowed a federal loan for their undergraduate education defaulted within 12 years of enrolling. That’s double the rate of borrowers without children.
Even worse, 70 percent of student-parents who defaulted were single. For African Americans, single parents made up 90 percent of student-parent defaulters. As a result, 1 in 10 undergraduate borrowers was a single parent, but these students represented 2 out of every 5 undergraduate defaulters. For these borrowers, who are often the sole providers for the family, default can keep them entrenched in their current financial situations, making it all the more difficult to improve their circumstances.
Student-parents are not a small subset of higher education enrollment. There are about 4.8 million undergraduates who are parents, 2.7 million of whom borrow to cover the costs of school. Students with children are disproportionately women of color, and most are enrolled at community and for-profit colleges. When these students borrow and default, they are thrust into a financial situation that is difficult to remedy.
Combined with low completion rates, these figures demonstrate how much our higher education system struggles to serve those who need extra assistance. When student-parents don’t have access to comprehensive support systems, they suffer, both while enrolled and after. The federal government, states, and institutions must find ways to better address the needs of student-parents if the goal is to give them the opportunity to provide a better future for themselves and their families.

ORIGINAL SOURCE: CLICK HERE 

The share of new entrepreneurs age 20 to 34 dropped to 24.4% last year from 34.8% in 1996, according to the Kauffman Foundation, which studies entrepreneurship. A nationwide study by the Philadelphia Fed concluded significantly higher student debt in a given county compared to the U.S. average resulted in 14.4% fewer new businesses.
Borrowers find it harder to invest their own funds to start a business, pay expenses before the firm is profitable and get loans, says Arnobio Morelix, Kauffman’s senior research analyst. Business start-ups are vital to growth because they tend to hire more workers and devise innovations that increase productivity.
Skeptics argue that the higher earnings that result from college degrees typically more than offset the added debt. Mark Kantrowitz, a consultant on student loans and scholarships, says that from 1995 to 2013, the average debt-payment-to-income share for college graduates ranged from 9.1% to 11%, according to his analysis of federal data. He says perceptions of a student debt “crisis” are colored by the fewer than 1% of borrowers with debts over $100,000, 90% of whom are professionals such as doctors and lawyers who can easily afford the loans.
Matthew Chingos, a senior fellow at the Urban Institute, attributes the hand-wringing over student loans to the growing share of borrowers from wealthier families. He says it’s not clear that providing that group relief would help the broader economy.
Many of those squeezed, Kantrowitz says, are college dropouts who are stuck with the debt payments but never realized the fruits of a degree, or graduates who chose less practical majors such as ethics and history. Dropouts are four times as likely to default on their loans, he says, citing his analysis of Education Department figures.
“We don’t have a student loan problem so much as a college completion problem,” Kantrowitz says.

ORIGINAL STORY: CLICK HERE 

Days after a report on federal student loans revealed a double-digit rise in defaults, President Trump’s administration revoked federal guidance Thursday that barred student debt collectors from charging high fees on past-due loans.
The Education Department is ordering guarantee agencies that collect on defaulted debt to disregard a memo former President Barack Obama’s administration issued on the old bank-based federal lending program, known as the Federal Family Education Loan (FFEL) Program. That memo forbid the agencies from charging fees for up to 16 percent of the principal and accrued interest owed on the loans, if the borrower entered the government’s loan rehabilitation program within 60 days of default.
The Obama administration issued the memo after a circuit court of appeals asked for guidance in a case against United Student Aid Funds (USA Funds) challenging the assessment of collection costs. Bryana Bible took the company to court after being charged $4,547 in collection costs on a loan she defaulted on in 2012. Though she had signed a “rehabilitation agreement” with USA Funds to set a reduced payment schedule to resolve her debt, the company assessed the fees.

Regarding the May 18 news article “School choice is a priority in proposed budget”:
President Trump’s latest shortsighted and slipshod budget proposal twists the knife on Americans struggling with extortionate student loan debt and disincentivizes pursuing careers serving the public interest.
As the nation’s largest and oldest public defender organization, we rely on student loan programs such as Public Service Loan Forgiveness to support our lawyers’ careers and their stake in our work and to keep our ranks full with talent. PSLF has also served to diversify the nonprofit defender sector, with more and more law graduates from black and brown low-income communities using the program to solidify a lifelong career in public service work.

Some loan forgiveness programs are taxable and some are not. Under current law, the amount forgiven generally represents taxable income for income tax purposes in the year it is written off. There are, however, a few exceptions. Generally, student loan forgiveness is excluded from income if the forgiveness is contingent upon the student working for a specific number of years in certain professions.
Public service loan forgiveness, teacher loan forgiveness, law school loan repayment assistance programs and the National Health Service Corps Loan Repayment Program are not taxable. Loan discharges for closed schools, false certification, unpaid refunds, and death and disability are considered taxable income. The forgiveness of the remaining balance under income-contingent repayment and income-based repayment after 25 years in repayment is considered taxable income.