Many students accumulate student debt loans that cannot possibly paid back from their regular monthly wages. This is a serious problem since, as we have stated many times previously, these debts cannot be written off through bankruptcy. So what is the solution, if any?
Their are a number of government options that limit the portion of income to be paid in debt service for these loans in addition to the fact that some public service would entitle the provider to a student loan write off after a certain period of service. The best alternative is contained in HR 7140 which has not become law yet. It is my sincere belief that every student must contact his/her representative in congress and lend support for this great bill. It will make student loan write offs easier especially after public service.
We have dealt with all the above previously so why the repetition? The only aim of this post is to stress that as good as write off are at times they are much less than they appear to be. This post is not going to deal with the specifics since each loan and each program is subject to slightly different provisions. Our aim however is to remind the student loan borrower that in many cases the IRS will treat a write-off as income. Yes, you heard it right. It might take you ten years to qualify to say a $40,000 right off but the IRS will consider that as income and will increase your taxes for that year accordingly. It is true, at least in this case, that no one can avoid death and taxes., especially those who carry student loans.
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