Category Archives: Student Loans

Student loan debt is a common source of financial strain for Americans. Our Kansas City bankruptcy attorney helps those struggling with student loan debt.

Do You Have to Pay Taxes on Forgiven Student Loans?

Many federal student loan borrowers can take advantage of Department of Education programs that limit monthly payments. In fact, there are four repayment programs that limit monthly payments based on discretionary income. These options also allow borrowers to receive loan forgiveness after completing the specified number of timely payments required by their chosen Repayment Plan. For instance, Income-Based Repayment (IBR) provides loan forgiveness after making 20 to 25 years of qualifying payments. However, many borrowers do not realize that at the conclusion of the Plan when the balance remaining is forgiven, as the law stands now you will receive a notice (or 1099 Statement) indicating you will have to claim the forgiven amount as income.   You could find this to be a very unwelcome surprise after thinking you had made your final payment. It is difficult to determine how much you would have to pay after completing your student loan…
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Enrolled in Income-Driven Repayment? Avoid This Nightmarish Student Loan Repayment Mistake

We have blogged extensively about income-driven repayment plans (IDR) plans for eligible federal student loan borrowers. The Department of Education offers four income-driven repayment plans to eligible borrowers; Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE). Each plan has different requirements and repayment structures. However, there is a universal rule for all four plans – you must recertify your income each year. Some people forget to recertify, and the consequences are horrific. Income-driven plans limit your monthly payments to a percentage of your discretionary income. For instance, let’s say that you earn $37,000 a year, are enrolled in the IBR plan, and pay $117 each month on a $75,000 student loan balance. If you failed to recertify by the due date, then your payments could revert to what they were under the standard 10-year repayment plan. This means you could…
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Education Secretary Reprimanded for Violating Student Loan Court Order

Department of Education Secretary Betsy DeVos recently made the news after a judge slammed her decision to continue collecting payments from former Corinthian Colleges students. A court order barred the Education Department from collecting loans of former students. However, the court order did not stop Betsy DeVos, whose department continued to pursue the payments. As a result, thousands of former students faced wage garnishments and tax refund seizures. Many others made unnecessary payments. Corinthian Colleges was a for-profit higher education company that shut down after allegations of fraud as well as having high default rates and generally poor outcomes for students. While not all for-profit universities are necessarily bad, Corinthian Colleges became an example of a bad actor in the industry. The Consumer Financial Protection Bureau (CFPB), a federal consumer protection agency, sued Corinthian Colleges and eventually settled for $480 million. Corinthian Colleges shut down in 2015. Although Corinthian Colleges…
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