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Posted on 8/25/22 at 2:22 pm to gumbeaux
I wouldn’t spend that money just yet. There is a chance this decree doesn’t survive legal challenge.
ETA: sorry, didn’t read the replies. It’s already been discussed
ETA: sorry, didn’t read the replies. It’s already been discussed
This post was edited on 8/25/22 at 2:26 pm
Posted on 8/25/22 at 2:29 pm to Mingo Was His NameO
quote:
Seems like political suicide to waive such a big carrot if you know you have no chance of actually doing it.
Thoughts on what I read yesterday....
Biden's only 'authority' to do this is granted because we are still actively in the public health emergency.
I think the whole idea is completely ridiculous, immoral, unethical, and another in a long list of erosions to the fabric of who we are as a country - but, it is potentially a smart political move - making the supreme court shut it down, thus making the "republican majority" in the supreme court something that needs to be fought against...
Posted on 8/25/22 at 2:34 pm to GoIrish02
quote:
Those who benefit are mostly wealthier, white college-educated liberals who would vote Democrat anyway, who are also the Dems' only hope to stem a likely midterm
Posted on 8/25/22 at 2:45 pm to GoIrish02
quote:
No matter the accounting treatment (writing off a receivable at the DOE vs spending money from the Treasury), the executive branch cannot do things via executive order that aren't based on laws that exist based on Congressional action. If you can point to a law that allows forgiveness on a whim, everyone would be interested to hear it.
You know... the Supreme Court said the ACA penalty was actually a tax (which is completely insane)... so I've stopped trying to figure out what the courts will do.
I don't think the law is crystal clear which is why I think Biden was trying to give Congress every opportunity to do this. But Congress didn't and he needs political points so here you go.
I'm also not sure the president has the authority to suspend payments for almost 3 years but that hasn't been thrown out either.
I don't think it's a guarantee this gets tossed out. I also don't think it's a guarantee it's upheld. It just depends on how populist the supreme court is at the time it is heard.
Posted on 8/25/22 at 3:59 pm to gumbeaux
quote:As part of the American Rescue Plans, all student loans that are forgiven are not taxed through 12/31/2025.
Will he need to claim the $6000 as income on his tax return?
Posted on 8/25/22 at 6:06 pm to gumbeaux
If implemented as Biden laid out w/o any other changes (whether those changes be on the admin side, due to legal challenges, etc), the answer to your questions are:
1) It will not be treated as taxable income. Think of it as your son find 10k cash off the street and being able to directly apply it to his student loans. No ramifications there.
2) The credit impact will not be any different than if he had paid off the loan himself with his own money. A decrease in balance is generally credit score positive. Since this will eliminate the entirety of his debt, then the credit line will "close" as "paid in full". There may be a small dip in credit score (like a few points), that would be the same as if he had closed/finish paying off any other credit/loan line. The credit impact both ways is probably minimal, and nothing to worry about.
1) It will not be treated as taxable income. Think of it as your son find 10k cash off the street and being able to directly apply it to his student loans. No ramifications there.
2) The credit impact will not be any different than if he had paid off the loan himself with his own money. A decrease in balance is generally credit score positive. Since this will eliminate the entirety of his debt, then the credit line will "close" as "paid in full". There may be a small dip in credit score (like a few points), that would be the same as if he had closed/finish paying off any other credit/loan line. The credit impact both ways is probably minimal, and nothing to worry about.
Posted on 8/25/22 at 6:35 pm to LSUFanHouston
Where does the government get money from? Taxpayers.
Posted on 8/25/22 at 6:40 pm to blackoutdore
Debt "forgiveness" is taxable income. However, in a previous COVID spending "stimulus" Congress exempted student loan "transfer" from being subject to the same recognition as taxable as would apply to a mortgage, county property tax bill, etc. LINK
They likely extended the payment suspension until after the election, because at some point a court will, in 2022, declare the scheme unlawful, but not until after votes have been counted in the mid-terms. Then all the little gender studies majors with 160k in debt that pulled the level for more idiocy can blame the (R) who will likely be in power.
They likely extended the payment suspension until after the election, because at some point a court will, in 2022, declare the scheme unlawful, but not until after votes have been counted in the mid-terms. Then all the little gender studies majors with 160k in debt that pulled the level for more idiocy can blame the (R) who will likely be in power.
Posted on 8/25/22 at 7:54 pm to gumbeaux
No and No is the answer
Posted on 8/26/22 at 6:48 am to gumbeaux
Nope, the majority of student loan forgiveness is tax free. There is one situation where you pay for 20/25 years and get a "tax bomb" but it is rare.
Some people see a bump because the balances are reported to zero... some people see a dip because their loans just vanish from their report and you lose the age and on time payments from the now missing loans. It just depends on the servicer and what and how they report. The trend has been to consolidate servicers over the past few years so hopefully that becomes more consistent.
Some people see a bump because the balances are reported to zero... some people see a dip because their loans just vanish from their report and you lose the age and on time payments from the now missing loans. It just depends on the servicer and what and how they report. The trend has been to consolidate servicers over the past few years so hopefully that becomes more consistent.
Posted on 8/26/22 at 8:32 am to gumbeaux
Can y’all stop assuming the gender of the student loan holder? Y’all might understand gender a little better if you had student loans since you’d have a PhD in it
Posted on 8/26/22 at 8:42 am to gumbeaux
quote:
So it appears the remainder of his loan will be forgiven.
The lawyers i've seen say there's maybe 2% chance of this actually working. I'd tell him to keep paying.
Posted on 8/26/22 at 8:46 am to j1897
quote:
The lawyers i've seen say there's maybe 2% chance of this actually working. I'd tell him to keep paying.
They're frozen, why on earth would he keep paying? Telling him to jump off a cliff would be better advice
Posted on 8/26/22 at 9:50 am to blackoutdore
quote:
Think of it as your son find 10k cash off the street and being able to directly apply it to his student loans. No ramifications there.
That's a bad analogy. Legally, you are supposed to report found money/property as miscellaneous income, which is then treated as ordinary income.
quote:
Since this will eliminate the entirety of his debt, then the credit line will "close" as "paid in full".
It's idiotic, but I would guess there will be a dip in a lot of people's credit scores. Shortly after those loans are paid off, the loans/accounts will be closed. Student loans are usually people's first debt; therefore, their oldest debts. When the accounts are closed, it could have a serious reduction to their Credit Age.
Posted on 8/26/22 at 9:55 am to Weekend Warrior79
Absolutely, they will find a way to consider this earned income and will tax it.
The promise of paying off student loans, without ever delivering is what the left needed. It was this dream they could push and brainwashed people would buy into the hope. But actually doing it, well, now they have let the genie out of the bottle. Now they actually have to find a way to pay for it, and that is going to be catastrophic. In a time when inflation is out of control, lets print MORE FREE. You saw Jay P's comments a few minutes ago, inflation will pick up as soon as this and the "Inflation Reduction Act " get funded
The promise of paying off student loans, without ever delivering is what the left needed. It was this dream they could push and brainwashed people would buy into the hope. But actually doing it, well, now they have let the genie out of the bottle. Now they actually have to find a way to pay for it, and that is going to be catastrophic. In a time when inflation is out of control, lets print MORE FREE. You saw Jay P's comments a few minutes ago, inflation will pick up as soon as this and the "Inflation Reduction Act " get funded
Posted on 8/26/22 at 10:02 am to CalcuttaTigah
quote:
Loan forgiveness is typically taxable but we shall see.
I imagine whatever legislation or executive order provides for the loan forgiveness will also specify that the forgiveness does not create taxable income, much like PPP loan forgiveness did not create taxable income.
My prediction is if done by EO, that the implementation of the forgivness program, if carried out, will be the biggest cluster-F of bureaucracy every devised. I think that there is just as an equal of a chance that the Biden Admin will just forget to implement the EO--they got all the brownie points they needed before mid-terms in announcing their intentions, but they won't get around to actually doing something about it.
Posted on 8/26/22 at 10:35 am to texn
I'm interested in how the debt forgiveness works.
During the pandemic, while the student loan pause was in effect, we completely paid off our loans (~20K, 13K for me and 7K for my wife).
I was shocked to find out I could get refunds for those payments (and its been that way for like a year), but a couple articles I've read so far say wait until DOE gets guidance with this in relation to student loan forgiveness.
I would love to get a refund for my 20K or at least some of it
During the pandemic, while the student loan pause was in effect, we completely paid off our loans (~20K, 13K for me and 7K for my wife).
I was shocked to find out I could get refunds for those payments (and its been that way for like a year), but a couple articles I've read so far say wait until DOE gets guidance with this in relation to student loan forgiveness.
I would love to get a refund for my 20K or at least some of it
Posted on 8/26/22 at 11:18 am to Mingo Was His NameO
quote:
They're frozen, why on earth would he keep paying?
Doesn't that end this month?
Also, why on earth wouldn't he?
This post was edited on 8/26/22 at 11:19 am
Posted on 8/26/22 at 11:20 am to j1897
quote:
Doesn't that end this month?
No
quote:
Also, why on earth wouldn't he?
Uhhh, because they may get forgiven
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