- Days left

Want to stimulate the economy? Increase student loan tax credits

While I can appreciate the stimulus package's focus on "shovel-ready" projects and I can even understand some of the rationale behind propping up banks, I feel that the administration missed a huge opportunity to help out a large portion of our population -- people with student loans. All of new legislation regarding student loans has focused on making relatively small amounts of funding available to incoming students disregarding the huge population of 20- and 30-year-olds who are still making mortgage-sized payment to lenders like Sallie Mae.

The housing credit may be helpful to this age group but despite the benefits to owning a home in the current economy many graduates are sending more money to Sallie Mae than they can afford to commit to Fannie Mae. The government has an excellent opportunity to help out responsible borrowers without writing off any student loan debt by raising the amount of interest that can be claimed under the Student Loan Interest Deduction (IRS Publication 970, "Tax Benefits for Education.")
Currently graduates can only deduct the first $2,500 of student loan interest paid in a given year, but with the increased debt load of recent graduates many, including myself, end up with plenty more to deduct. Even if the only change would be to up the amount of tax credit a married couple could receive to $5,000 it would provide significant benefits. The additional $2,500 may not be enough for a down payment but it could help young people increase their savings or make an economy stimulating purchase like a first house.

With all the focus on how to fix student loans for students who will be in college in 2010 it seems that the administration has forgotten about the students who are already diligently paying back the cost of their education. Small steps like an increased tax credit can provide positive re-enforcement for these individuals while decreasing the default rate and negating the need for a full on student loan bailout in a few years.

Increase your money and finance knowledge from home

How to Avoid Financial Scams

Avoid getting duped by financial scams.

View Course »

What is Inflation?

Why do prices go up?

View Course »

TurboTax Articles

Employer Sponsored Health Coverage Explained

The Affordable Care Act, also known as Obamacare, is simpler than some people may give it credit for. The basic rule to remember is that everyone must carry Minimum Essential Coverage (MEC) or pay a penalty. Employers with 50 full-time employees or more are obligated to sponsor plans for their workers to help them meet this requirement.

How to Report RSUs or Stock Grants on Your Tax Return

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash. As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

What is a Schedule Q Form?

The Internal Revenue Service (IRS) has two very different forms that go by the name Schedule Q. One of them is for people who participate in certain real estate investments; this is known as a Form 1066 Schedule Q. The other Schedule Q deals with employer benefit plans. It?s not something an individual taxpayer would normally have to deal with, though a small business owner might need it.

Incentive Stock Options

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability, so you can optimize the value of your ISOs.

Add a Comment

*0 / 3000 Character Maximum