Tag Archives: StudentDebt

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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Jobs That Qualify for Student Loan Forgiveness

Private and federal student loan debt currently stands at $1.6 trillion. Many borrowers struggle to make payments, and some studies suggest the default rate on federal loans could hit 40 percent by 2023. However, there are many payment options that can help federal student loan borrowers avoid default. There are also programs in place that can help federal borrowers receive loan forgiveness for working in certain types of jobs. Below, we have included more information about the types of jobs that qualify for forgiveness under certain programs. Federal, State and Local Jobs If you work for a federal, state or local entity, then you may qualify for the Department of Education’s Public Service Loan Forgiveness (PSLF) Program. Examples of qualifying jobs could include working for the FBI, CIA, state legislature or as a police officer for a municipality. However, there are additional requirements that are notorious for creating confusion. For…
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