Death & Taxes & Student Loans
It is well known that Benjamin Franklin said, "the only things certain in life are death and taxes." Although this is still true, I would add student loans to the list -- at least for most of us. Especially since 85% of law students graduate with $100,000 of debt.
Now that tax season is upon us, the federal government has teamed up with TurboTax to spread the word about student-loan repayment options.
As the Chronicle of Higher Education reported, "[s]tudent-loan borrowers filing their taxes through TurboTax this year will be encouraged to enroll in an income-based repayment plan, the Departments of Education and of the Treasury are expected to announce on Friday.
As part of the White House's efforts to raise awareness about income-based plans, the Obama administration has reached an agreement with lntuit Inc. to include a banner on its TurboTax tax-preparation website inviting users to learn more about their repayment options.
When borrowers click on the banner, they will be directed to the Education Department's repayment estimator, where they can receive estimates of their monthly payments under various income-based repayment plans, and apply for a plan."
I understand why income-based repayment may not be the most popular choice for all borrowers because, under the current plan, the amount forgiven is taxed, which can result in a hefty tax bill. So even if some student-loan holders qualify for IBR, they might forego the option.
However, in the past, I've blogged about IBR in conjunction with Public Service Loan Forgiveness and the fact that it is being underused. If you qualify for PSLF, I would highly recommend it as a viable option to afford your higher education.
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