Should those who receive a student loan bailout be required to pay taxes on that money?
I’m not a CPA or any kind of accountant or tax expert.
Seem reasonable to me to tax the loan forgiveness handouts.
Social Security payments are heavily taxed. Why not student loan forgiveness money?
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No because they never received money, only forgiveness.
Nothing went into a checking account.
What’s normal when a loan (car loan, for example) is forgiven? I think that’s taxable. We should be consistent.
No, it’s forgiveness, not income.
I think that no payments coming from the government should be taxed. It just seems like bureaucratic nonsense to me.
And in this case, it is not even a payment.
To “tax” this would be like cancelling an Amazon order, and still having to pay taxes on the purchase price.
Just like the taxes now implemented on social security or unemployment benefits, it would merely boil down to a huge benefit reduction in disguise. It’s a slimy tactic by politicians who dare not openly cut benefits.
@KNOWITALL That’s sad because they would need it most. I wish there were other stipulations like grade point average and if you just flunked out because you were too busy partying.
@ragingloli I bought an extended warranty on a truck I bought from a Ford dealership. The very next day I called to cancel the extended warranty. I was told that I’d receive the all the money back except for the taxes. I told the Ford manager that it’s not right for me to pay taxes on something that I never got. He said that I had the warranty for one day. I counted with, so you expected that I might stop off at an auto repair shop on my way home from your dealership and get major repair work done? Also that I will dispute this tax charge through my credit card company. Suddenly the tax was gone. HA!
I remember the pandemic unemployment bonus was taxable.
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Response moderated
@Caravanfan Another thing people don’t get is just how predatory some of the lending became in recent years. Loans were so free and easy that “no” was not in the vocabulary. It was so bad that for-profit “schools” popped up just to charge ridiculous tuition for trumped up “degrees” that were completely worthless. Particularly bad were non-accredited trade schools that passed anyone with a pulse, had zero entry requirements and charged 10x what a program in a traditional community college would. Those loans should never have been made and the people duped by them are really not so much at fault because they were essentially fraud victims. If you asked me, what should happen here is they needed to forgive those types of loans and zero the interest rates on the others rather than do this blanket 10k thing. I also think it’s time to do something about the arms race going on with state universities that are trying to 1up each other in the rankings with huge, unnecessary infrastructure projects. They’re paid on the backs of students through unreasonable tuition hikes. I never left school, I have been a student in some capacity on and off since the mid 90’s. Tuition then was pennies compared to now. For cheap in-state university tuition you’re looking at $1000 per credit hour. If a course is four credits it will cost you $4,000 for that one course. One. My last car did not cost that much.
Response moderated
NO! People who qualify for student loan forgiveness, have already suffered more than they should have, and don’t deserve to be penalized again by the IRS.
If religious pedophiles and wealthy people don’t pay taxes, why should anyone?
Sure. They took out a loan for an education. They got the education but never paid back the loan. Someone lost money on that deal and someone gained a tangible item. If you win a car in a raffle, you still have to pay the taxes on the value of that car, even though it didn’t go into your checking account.
@chyna Here, they are allowed to harass our seniors on SSI-Disability, for payment. And if you can’t pay, and work to do better, they ‘garnish’ your tax return.
Sadly many seniors already paid the loan if no interest were charged. It infuriates me because I hear it often.
I think most students are so overburdened with debt by the time they are out of college that a little help like not paying taxes should be fine. I will be facing that situation in the future and some help would go a long way in getting my career off the ground. Then once I’m finally making money they will tax me a lot I’m sure anyway. Don’t the government get enough money from all of us already?
@RayaHope I hate to be the old curmeudgeon here, but I will be.
Someone (the finance company or the bank) is out the money thatw as originally supposed to be paid back. The government will pay them back. But where does the government get its money from? Yep, people like your parents and grandparents.
So nice people who don’t have to pay off their loans – they should thank those of us who pay our taxes. Money doesn’t come from nowhere….
Yes. we all pay taxes. At least those of us old enough to work.
^^ I wish I knew more about money stuff. I hope I can pay back my loans when the time comes.
All you need know about money stuff is that it is NOT the banks who take a bath. It’s NEVER the banks whose loans are guaranteed repaid by the government if you can’t. It’s taxpayers who take the hit. College tuition is outrageous PRECISELY because government guaranteed student loans allowed colleges to jack up prices orders of magnitude beyond actual inflation in line with the ethical realities of the system they serve. It is NOT an enlightened society that requires its population of young people to enter the work force saddled with debt. It is both STUPID and counterproductive to DELIBERATELY disincentivize education at any level in a population clearly distinguished for its already inordinate supply of dummies.
@RayaHope As another old curmudgeon, I’d say @elbanditoroso was patronizing you there. The government “borrows” TRILLIONS of dollars for whatever it can agree to spend on, and you do NOT need to think of student loan forgiveness as coming out of the pockets of nice old people who don’t have much money. That’s not a fair assessment of what’s going on. Nor is what’s “supposed to” happen that the nice bank or finance company gets to charge compound interest to students so they can get a competitive education. Compound interest, especially by banks, is one of the most broken and unfair systems ever invented, and actually it DOES involve making up money to loan.
@HP I’m sorry that I am a dummy :( but that is why I’m trying to learn things. I don’t know so I’m trying to learn. You sound a lot like my dad and that makes me sad.
@Zaku I can not tell when someone is “patronizing” me maybe I am a dummy. Life is so confusing…I don’t know what to do.
Have y’all been keeping up with the White House twitter feed on this?
It’s particularly amusing.
@RayaHope That’s not your fault. You’re becoming an adult at a time when US politics have become super-crazy, with people talking from extremely different perspectives, many of whom will all say their perspective is the correct one.
I went to an extremely good private grade school. It featured teachers from various political perspectives (though US politics was quite different then), but they also carefully avoided teaching their own political perspectives, and taught us to consider things for ourselves. Critical thinking and discernment are maybe the most important things we can learn, as they can be critical for almost everything, Though listening and compassion are also needed, and it can be challenging to balance those, and also to keep an open mind about the things we think we know and are certain of.
One of the most important pieces is to realize that it’s rare (even in math) that there is only one valid perspective, and that it’s often valuable to consider many perspectives, and to be able to understand where each person is coming from.
@elbanditoroso ‘s perspective above has some value, but it is also an often-repeated political argument that goes back to at least the early 19th Century, when rich Southern slave-owners wanted to scare people into not letting the poor or black people vote, out of fear they would vote for roads and education that the rich people would end up paying for.
There are reasonable arguments to be done on both the policy and the politics of the issue. Here is my take.
First, the politics. Student loan debt forgiveness has long been a left wing ask for years, and the center and right are saying that the Biden administration is “pandering” to the left to allow this to go through. They say that the people that it benefits will mostly vote Democrat anyway so it’s not winning any votes. IMO this is a flawed argument. Biden by most accounts has been an effective president shepherding several major pieces of legislation and leading a foreign policy crisis, yet his approval ratings remain low. Yes, this piece of legislation will help the young and the educated who tend to vote Democrat. When they vote. And that is the key—Biden doesn’t excite anybody so getting people out to vote will be a chore. If he can do something to excite the left wing then they may be more apt to support him.
Now the policy, and this will be colored by my own politics which lean libertarian but are all over the map. From a birds eye view I feel that a healthy, educated society will lead to higher economic productivity than a sick, uneducated society. Because of this, I think that good free or inexpensive health care and education should be available to all individuals. My issue with this piece of legislation is that it does absolutely nothing to curb the overal cost of education. I can pay for my daughter’s college, but only becuase I started saving for it when she was 1 year old. I had the means to do so, but that’s untenable for most.
So yes, by all means, forgive some debt. I think the debt relief should be higher. However, as policy, it’s deeply flawed as the cost of college will not be touched by this and it’s just a band-aid on a bleeding wound.
the cost of college will not be touched by this and it’s just a band-aid on a bleeding wound.
This basically echoes my thoughts. The cost of tuition is out of control and only continues to climb, far outpacing wages, and little is being done to address it. Older generations often don’t realize this, that college was much more affordable in their day and even adjusted for inflation, the cost of tuition is exponentially higher than it used to be. Our generation was told we had to go to college if we wanted anything out of life, and student loans were the way to attend for many.
College is becoming a more difficult sell than ever before. A degree doesn’t guarantee you a good job anymore. But it might guarantee you tens or hundreds of thousands of dollars in debt.
This isn’t nothing and it will help some people, but the underlying problem is still very much there.
@Caravanfan‘s point about it being a good political move is partially right. It may motivate a few people who had correctly checked out of electoral politics. But there is considerable anger at the fact that it’s only $10k. For most people, this isn’t going to make that much of a difference to people who are stuck with $50k+.
To be fair, this is good. And there are some repayment cap provisions that are also good. But the fact is that Biden could have cancelled $40k or more (or all of it), and the response by the right would have been exactly the same. Half measures that only marginally improve peoples’ lives while becoming food for the right-wing propaganda machine in the long run may be a net negative. But for now, we have to celebrate a short-term minor relief for millions of people.
Re: @Caravanfan‘s (and @Demosthenes)’ take on the policy – we’re going to disagree here, because we’re on opposite ends of the ideological spectrum. But I just want to point out that it’s not sufficient to say that “this does absolutely nothing to curb the overall cost of education” as though it is a response to the $10k debt relief. We can acknowledge that millions of people will see actual relief in the short-term while at the same time fighting for free public college.
Yes, this is good and it does not address the larger issues of educational and economic justice. There’s no conflict here.
@hat I don’t disagree. I’m not really there on “free college”, but I am for reducing tuition costs and I wasn’t really saying “this is a bad thing”. Just a reminder that it’s a drop in the bucket.
A lot of the objections to this are just silly. People think they’re only paying for someone who majored in underwater basket-weaving. “Working people” have student loan debt too.
^ Gotcha. Sorry. I think I misread your earlier response. :)
Community college is free to most in my state. Better job prospects when an associate’s degree is earned in a trade also… There are other options for people.
Like healthcare, this is mostly a cost issue for something everyone needs access to. I’m with @Caravanfan on that.
@Blackwater_Park I tend to agree, but the question is not “What is wrong with the cost of higher education?”...it is should those that receive a bailout be required to pay taxes. The issue is that it doesn’t really matter what should or shouldn’t be charged for the education, but that people entered into a contract to obtain that education. SOMEONE has to pay for that loan. So if you forgive the individuals, you punish everyone with extra taxes or extra debt for the country to pay for the bailouts. AND you are effectively giving these people a monetary reward for not paying back their loans or for being fiscally irresponsible in the first place. So should they be taxed on that? I believe so.
Hat you and I basically agree. I think there should be free options for college for everybody. What I am saying is this one time loan forgiveness won’t do anything for current college costs. What’s to prevent colleges from just upping the price (which they do anyway)?
The point always ignored in the student loan debacle is EXACTLY the thing always neglected in nearly every issue. And that is who at bottom benefits overall. And in this one, it isn’t the people forced by the reality that without a sheepskin a career in an Amazon warehouse or as cannon fodder in some desert is your assigned destiny. The winners this time are indisputably the people who unlike yourself are allowed to lend money and collect interest AT ABSOLUTELY NO RISK. Think for a moment if you will ever bump into or be allowed to create such an opportunity for yourself. Just as with the bank and Wall st. bailouts, and countless other examples of just how the game is fixed and for whom, this one once more points to just who the system is DESIGNED to reliably screw. You can buy that business of personal responsibility as the big issue, but you merely have to pay attention to recognize it for what it is—pablum you feed to suckers.
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