Proposed legislation could make student loans fully tax deductible

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Photo (c) jayk7 – Getty Images

If Senator Rand Paul (R-KY) gets his wish, student loans may soon be fully tax deductible. Paul says he plans to introduce the Tax Free Education Act, a law that could change the face of student loan programs forever if passed.

In comments made at WDRB-TV in Louisville, Ky., Paul said his five-pronged approach would include the following:

  • Make tuition fees 100% deductible

  • Allow students to deduct the cost of their studies from their income tax

  • Include student loans as “education expenses”

  • Apply to all colleges and technical schools

  • Apply to the cost of K-12 education

The rising cost of education is important to Paul. Less than two years ago, he introduced the Higher Education Loan Payment and Enhanced Retirement Act (HELPER), a taxpayer-friendly plan that he said would help Americans pay off student loan debt faster and easier. , and give them an additional opportunity to save more money for retirement.

“Making university tax deductible, I think, would help a lot of families,” Paul said. “A lot of families are struggling. Tuition fees have doubled in the last decade. Loan repayments are increasing. I meet people in their 30s who are still trying to pay off their loans.”

Student loans: a box of worms

We are now in the fourth year of a protracted student loan battle, dating back to 2017, when a coalition of states pushed Betsy DeVos, appointed by Trump’s Education Department, to take action on 25 000 loan cancellation requests filed by students who found themselves stranded when they were abandoned. for-profit schools like the Corinthian colleges collapsed.

After DeVos left that box of worms on his desk for his successor, Biden-appointed new Education Secretary Dr Miguel Cardona quickly forgave more than $ 1 billion from 72,000 eligible requests for student borrowers – the majority of whom attended Corinthian Colleges and ITT Technical Institute.

It’s a good start, but there is still work to be done. According to The in-depth study of the situation by the Education Data Initiative, there is still a lot to consolidate, including addressing the variety of loan forgiveness programs that have different qualifications, forgiveness amounts and qualifications.

Unfortunately, the process of improvement has been painfully slow. Over the past two years, the number of refused requests has more than quadrupled and up to 43% of requests have yet to be processed.

What about the for-profit schools that are still in operation?

Another item on Cardona and Paul’s checklist could be helping students who have loans from for-profit institutions that are still in business. As an example, ConsumerAffairs reviewer Marnie of Massachusetts attributed Capella University to the issues it was fighting.

“Terrible! They took $ 82,000 from me without even knowing it with student loans so they could take advantage of it! I get a lawyer against Capella AND Nelnet. If you think after 15 years I will pay all YOUR back. FRAUDULENT money when I couldn’t even get my diploma after seeing my bill, you’re crazy, ”Marnie wrote.

Another frustrated for-profit student loan borrower – Melissa of Maryland – says she’s still trying to work things out with Strayer University. She accused the institution of taking her money and then changing the name of the program she took.

“I called the dean for advice. He was told he would understand. I received an email informing you that the program has moved to Business ADMIN. of HR. I took out student loans to get a degree in HR, not business. I could have gone to another school and got the degree I wanted. Now stuck with over 50,000 student loans without a job in HR, ”she wrote.


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