The United States House Committee on Education and Workforce voted to advance a new higher-education bill that will have a significant impact on students’ abilities to receive Pell Grants and student loan repayment plans. In addition, it would place restrictions on Parent and Grad PLUS loans. The advocates of these measures claim they are an effort to save hundreds of billions of dollars for potential incoming tax cuts. However, it would also have the effect of making higher education that much more unavailable to those who want the opportunity education affords. The bill, the Student Success and Taxpayer Savings Plan, was cast by Tim Walberg, the Republican chair of the House’s education committee, in an effort to reform the student loan system, push colleges to lower their prices and help shrink the federal deficit. It advanced along party lines and no Democrats voted in favor of the bill. In a…
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The U.S. Department of Education recently announced that federal student loan collections will resume for defaulted student loan portfolios on Monday, May 5. For just over five years, the Office of Federal Student Aid (FSA) has not collected on defaulted loans. The U.S. Secretary of Education, Linda McMahon, shared next steps for collections on defaults and details on the initiative overall in a press release from the Education Department. The collections will be paired with a comprehensive communications and outreach campaign to ensure borrowers understand how to get out of default and make their repayments. “Going forward, the Department of Education, in conjunction with the Department of Treasury, will shepherd the student loan program responsibly and according to the law, which means helping borrowers return to repayment — both for the sake of their own financial health and our nation’s economic outlook,” said McMahon. FSA will restart the Treasury Offset…
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Tax professionals receive questions related to cancellation-of-debt (COD) income, ramifications of debt workouts and restructurings quite frequently, especially in times of economic uncertainty. With tax season in full swing, it is important for individuals and businesses to understand the basics of COD income and what exclusions are common for businesses in this situation. COD income can occur in many circumstances, including the modification of a debt, the issuance of equity in satisfaction of debt, the acquisition of outstanding debt at a discount by a party related to the debtor, discharge of debt within or outside a bankruptcy proceeding, and more. Unless it is specifically excluded under the tax law, COD income is taxable under Section 61. However, there are circumstances that can lead to the exclusion of COD income based on what is stated in Sec. 108. An article from The Tax Adviser highlighted four of the most common exclusions…
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