- 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 much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

TurboTax Articles

5 Tax Tips for Single Moms

If you're a single mom filing your taxes, make use of tax credits and deductions that can help reduce your taxable income and reduce the amount of tax you pay. A number of strategies, credits and deductions can be used to reduce taxable income, and in some cases, allow tax refunds even if you didn't pay in any taxes. When you use TurboTax, we'll ask simple questions and handle these calculations for you.

Essential Tax Forms for the Affordable Care Act

The Affordable Care Act (ACA), also referred to as Obamacare, affects how millions of Americans will prepare their taxes in the new year. The law now includes penalties for all who haven?t obtained health insurance -- and those penalties are expected to be paid at tax time. The ACA also provides tax credits to help people pay for insurance, and you can claim those credits when you file your taxes. The Internal Revenue Service (IRS) has introduced a number of tax forms to accommodate the ACA.

What is Form 1095-A: Health Insurance Marketplace Statement

If you bought health insurance through one of the Health Care Exchanges, also known as Marketplaces, you will receive a Form 1095-A which provides information about your insurance policy, your premiums (the cost you pay for insurance) and the people in your household covered by the policy.

Keeping Yourself Safe From Tax Scams Today

During tax time, there are numerous types of tax scams. These illegal schemes can result in the taxpayer being responsible for extra interest, penalties and possible criminal prosecution. Tax schemes and scams attempt to gain access to your financial information by email, telephone, fax or mail. They also may attempt to falsely collect tax you owe to the Internal Revenue Service. Using TurboTax ensures your financial information remains safe.

Health Care and Your Taxes: What's the Connection?

Your cost for Marketplace health insurance is based on the income you file on your tax return. Your reported income also determines your eligibility for the tax credits and penalties associated with Marketplace health coverage. Everyone has to have health insurance and by filing your taxes, you let the government know if you carry health insurance. The tax system acts as a way for the government to levy a penalty on those who don?t have it and to provide assistance, by means of a tax credit, to those who do.

Add a Comment

*0 / 3000 Character Maximum