We’ve received questions about how exactly did the recent stimulus bill affect student loan forgiveness and any resulting taxable event? Here is the actual text of the change in law below.
As you can see this includes any taxable forgiveness of federal or private student loan debt.
Are you looking to buy a house now? Waiting could cost you as inflationary pressures will likely cause your dollar to decline. Moreover, interest rates will begin to rise in 2022 – 2023 as the Fed begins to normalize the interest rate. If you have student loan debt that has prevented you in the past from buying a home, keep reading…
In light of this, mortgages and refinances are a very popular topic now — especially among those with student loan debt. One big hang up was just resolved. Previously, a mortgage lender had to use 1% of the outstanding loan balance, even when a borrower was in IDR and the monthly payment reported on the Borrower’s credit report was zero.
We would suggest a temporary fix: the borrower would exit IDR for a month or two where the payment may have been zero, make a fixed standard or extended payment, apply for the mortgage and after approval, get back into the IDR. This wasn’t the best fix; however, as it unnecessarily caused a student loan borrower to have the loan capitalize the unpaid interest. But it did let someone buy a house who otherwise could not.
Now that the Department of Education (“ED”) is committed to revamping the Borrower Defense to Repayment rules and procedures, I thought it was time to re-visit an old foe. I was disappointed to find Accrediting Counsel for Independent Colleges and Schools (“ACISC”) was STILL in business. Despite the sudden closures of ITT Tech and Corinthian Colleges under its watch, it’s still out there, in part due to Secretary DeVos’ leadership of ED and former President Trump reinstating the accreditor in 2018.
This year, career staff at ED have again recommended that ACICS lose its accreditation power because it failed to demonstrate that it has competent and knowledgeable individuals, qualified by education and experience. For example, when ACICS visited Reagan National University and didn’t locate any instructional material, it didn’t even note the lack of materials as a deficiency in its report. ED stated that several other red flags were overlooked as well during site visits, USA Today reported in March 2021.
There are two levels of reviews and appeals available to ACISC which they are certain to use if nothing else to run out the clock.
Are you wondering about what to do with your student loan debt? Student Loan Planner had me on as a guest on their podcast talking about the student loan system in general, how we got here, what to expect from a Biden Administration and how to settle or obtain forgiveness of your student loan debt.
Here is the link to your episode: https://podcasts.apple.com/us/podcast/can-you-settle-your-debt/id1446453497?i=1000516901444
Christie Arkovich who has specialized in helping clients get through financial hardships since 1995. Christie was a champion of the student loan system working for Sallie Mae during the early stages of her career but came to realize that the system is broken. We talk about her work for Sallie Mae and why she “switched sides” to help borrowers navigate the many complexities of the student loan industry.
We have five seminars that our attorneys are presenting at this month and next!
Free course available on April 7, 2021 at 4:00 EST by Student Loan Attorney Christie Arkovich.
Everyone is asking what they can expect from a Biden administration’s student loan relief. In this course, you will learn about the CARES Act and its extensions, including COVID-19 forbearance; interest waiver for direct loans; rules for ongoing collections; and other nuances of these new federal laws protecting borrowers during COVID-19. We will also discuss the tax forgiveness waiver for all student loans provided by the stimulus bill and anticipated forgiveness in future bills. Traps for the unwary will be identified, and solutions will be provided by a nationally known student loan attorney.
For our CPA and financial planner friends, tomorrow I’m giving a FREE crash course in Covid-19 Student Loan Relief — what’s already happened, what can be expected from the Biden Administration.
You can sign up for Wed. April 7 at 4:00 EST. You can watch it later also and 1.0 CPE credit is available for this. Here’s the sign up page: https://www.cpaacademy.org/webinars/a0D2S00000puV4rUAE
Hope to see you there!
Here is an advertisement that a client sent me today from a loan she took out when she was 19 years old and didn’t know any better. She regrets it now when the balance has ballooned for her private loans to 100k and she only makes 35k after being out of school for many years now. We won’t discuss the additional 350k of federal loans, but at least there are income driven plans to fall back on for those.
There is no safety net for private loans and many lenders took advantage.
Looks like an exhibit to me… and what about this one:
We recently filed a dispute for one of our clients for student loans that were not accurately reported on her credit reports following our settlement. What a difference it made — 595 to 749!
I’ve received a letter today from Equifax stating that the 4 disputed XXXX accounts have been “Deleted from the credit file”. I checked my Equifax report through credit karma and they are indeed gone making my score jump from 595 to 749!
One giant leap for studentkind! Over 150 points in one fell swoop. If you need help addressing your student debt or debt that is incorrectly being reported on your credit reports, please reach out to us.
Inflation and interest rates are the two primary culprits.
Bankruptcy can actually be a fix to this problem and is something that everyone should evaluate NOW. Does it make sense to clear the deck and start fresh? Especially when that deck is stacked against most Americans who are not otherwise wealthy. Especially, for anyone who has private student loans, the decision is pretty much a no brainer — bankruptcy can result in a full discharge of many private student loans or a very low payment plan, with very low interest. Basically, a way out.
High credit card balances, underwater vehicle loans, unpaid rent — bankruptcy can easily fix this.
Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog