Monday, July 29, 2013

Tax Consequences Faced By Students

Dana Lime, over at NerdWallet, just published a study on the tax consequences faced by students as a result of the Senate's new bill on student loans. This study is worth sharing with all of you.

The Nerdwallet study found, according to Lime the following: 

  • [First], while the Senate has approved lower rates on student loans at 3.86% for the next few years, on average students will lose 25% of their higher loan costs in taxes because the IRS currently limits student interest deductions to $2,500 a year. This limitation is even more egregious for future students borrowing at higher rates linked to the 10 yr treasury note.

NerdWallet's [Other] Key Findings:

  • A student who borrows at 3.86% will lose $530 in lost tax benefits over 10 years because of IRS interest deduction limits
  • A $500 increase in the limit could collectively save students up to $950 million over 10 years
  • Current IRS rules hurt future students who will pay more interest than current students
  • IRS income restrictions penalize higher income grads who are ineligible for the deduction


    Links: 

     
     

2 comments:

Strelnikov said...

It's all just moving deck chairs on the Titanic....the student loan load is unmanageable as it is; playing with the interest rates won't get rid of that trillion-plus.

Anonymous said...

Amen to the commenter above!! We're a sinking ship!