Article provided by: Goodbye Loans
With all of the political jargon upon the American landscape today, it can sometimes seem impossible to find honest and unbiased information regarding the President Trump student loan forgiveness plan. Goodbye Loans is here to cut through the politically-charged rhetoric and give you fair and accurate reporting regarding the Trump student loan forgiveness plan.
Death and Disability Discharge Under President Trump
There have been some major changes to the student loan forgiveness program since President Trump took office. For example, in the 2018 Tax Cuts and Jobs Act, President Trump changed the Death and Disability Discharge tax rules. This means that upon death or incurring a permanent disability, 100% of your student loans will go away. This was a celebrated part of the new student loan forgiveness plan and was not the case under the previous administration.
Before the Tax Cuts and Jobs Act, student loans were considered to be taxable income. Therefore, if you had $50,000 of student loan discharged for disability under the old law, you could still $10,000 or more in taxes remaining. Under the Trump student loan forgiveness plan, death and disability discharges are now tax-free. Hopefully, death or disability doesn't happen to you, but if it does, you can have peace of mind knowing that your debt will be discharged completely. There is one small caveat to consider; this provision is only in effect until 2025, at which time Congress will vote to renew it.
Elimination of Tuition and Fees Tax Deduction
Another big change to the student loan forgiveness plan that was enacted through the Tax Cuts and Jobs Act, and is widely viewed less favorably than the Death and Disability Discharge provision is, is that the Tuition and Fees tax deduction was eliminated. However, there are other tax credits that you might be eligible for to pay for higher learning, such as the American Opportunity tax credit and the Lifetime Learning tax credit. Fortunately, these tax credits stay the same under the new law.
The Proposed Elimination of the PSLF Program
There are also some proposals on the table that would affect the student loan forgiveness plan in the future. Proposals aren't current law, but they give us a sense of the direction in which we can expect the student loan forgiveness program to go. One of the proposals that have a lot of borrowers on edge is the elimination of Public Service Loan Forgiveness (PSLF).
PSLF is one of the top ways to currently get student loan forgiveness. A lot of people like this program because after ten years or 120 payments, your loan is forgiven tax-free. It's one of the few loan forgiveness programs that currently offers tax-free forgiveness. This program opens the door for a lot of people to get their debts forgiven because "public service" is a broad definition. President Trump attempted to eliminate the PSLF program in the 2018 budget by removing the funding for it. A series of legal battles ensued, and the proposal was dropped. However, in his 2019 budget proposal, Trump is again proposing to eliminate the PSLF program.
Contact Goodbye Loans to Learn More
These are just some of the changes made by the Trump student loan forgiveness program. To learn more, contact Goodbye Loans today.
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