Student loan borrowers are eligible to write off the amount of interest paid on their student loan debt each year. For some student loan borrowers the tax credit is even extended into debts forgiven by the lender under an income based plan. However, this could soon change.
Call To Action
If certain tax credits are not renewed at the end of this year, many borrowers could see a significant change in their tax liability bill come 2015. However, there are movements in Washington hoping to avoid such problems.
The Obama administration has revealed plans as part of the budget for 2015 to extend the tuition tax credit and student loan debt forgiveness credit. Further, the budget will also request for Congress to make permanent the American Opportunity Tax Credit that is set to expire come 2017. It is said that keeping the credit in place can provide an average benefit of $1,110 to some 11.5 million families, and up to $2,500 in partially refundable tax credits for tuition payments. The plan is also said to ask for a clarification of tax credit rules for Pell Grant recipients, so they may also benefit from a reduction in tax liability.
While there are some obvious critics of the idea it is important that steps are being taken to improve students access to college, while working to combat the growing problem that is plaguing the student loan industry. Student loan lawyers all over the country are faced with the challenge of helping hard working graduates find relief from heavy balances and financial hardship, it’s nice to know the fight isn’t going unrecognized.