Loan forgiveness for federal loans is for an extremely few number of people and it’s almost certainly about to get a lot harder.
For private loans? I’d be shocked if there’s ever any sort of loan forgiveness program.
Really though, I can’t understand what you are so angry about. Her financial aid as it concerns you guys is done. She can’t legally (it seems) claim herself on taxes.
How is she going to take away your “gravy”?
So you are okay with her borrowing money she never has to repay, but that all of us, as taxpayers, have to absorb? Why is that fair to my kids who chose schools they could afford, who worked to pay rent (not go out with friend).
You asked a simple question of whether she’d get better aid if she became independent and whether that was fair for you on YOUR taxes because you are supporting her. No, she won’t get better aid and yes, you will pay higher taxes if you can’t claim her.
You’ve received bonus info that she can’t be independent for IRS purposes and that whatever loans your wife co-signed for ARE wife’s responsibility too.
Just saying. I think some of us may be overinterpreting what OP is saying. He’s in a position where he can’t easily help her. Nothing tells me he’ll encourage her to ditch her responsibilities. If anything, he’s said he’s worried about the loans. He isn’t one of our poster types who treats loans as nothing and pursues enormous amounts. Early on, he said he was uncomfortable with the cosign.
This was really just a verification question, an, “Am I right that there’s no benefit to tax independence?” Some of the rest of it, imo, is understandable frustration, some confusion and, I’d bet, knowing he now has to deal with the kid’s misunderstanding.
If the son is younger than stepD and picks a SUNY or CUNY and if your income that is reported on his FAFSA is under the income limit, currently $100,000, but going slightly up in the next two years, then he might be able to take advantage of the new Excelsior scholarship. It covers tuition. So if he takes his student loan, works and does without a car, then maybe he can get away with less loans. Or no loans if he commutes.
“So you are okay with her borrowing money she never has to repay, but that all of us, as taxpayers, have to absorb? Why is that fair to my kids who chose schools they could afford, who worked to pay rent (not go out with friend).”
I’m OK with the richest Americans, more than likely not you, to start paying their fair share again, so that education, which was guaranteed to be paid for through high school practically since our founding, be extended through a Bachelor’s degree in the twenty first century, yes.
But that is big time thread drift so that’s the last I will say about that.
there isn’t loan forgiveness for PRIVATE loans.
And legislators certainly can’t make banks cancel private loans.
You’re confusing federal loans with private loans. Fed legislators perhaps, but not likely, could do something about federal loans since those are in their area.
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How is she going to take away your “gravy”?
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Well if his wife is finally earning more money (gravy), but suddenly has to pay on her DD’s cosigned loans…that would be taking away the couple’s gravy.
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OK with the richest Americans, more than likely not you, to start paying their fair share again,
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Lol…those with the highest incomes are already paying a large % of their incomes in taxes. What do you want them to pay 75% in taxes?? Do you realize that if we taxed those with the highest incomes at 100% (take all their income every year) that still won’t fund what you want?
more than likely not you
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Oh yes, it would have to be people like us because to get the amount of money that you’re talking about, the increases would have to affect those in this forum.
Her mother consigned, without me fully understanding what was happening. My wife assures me that both of them understand they are her (step daughter's) loans. I've made it quite clear that I would be livid if they somehow landed in my wife's lap...because we obviously work aa a team and whatever affects her affects me.
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Again, if your stepD continues to think that you somehow screwed her by claiming her and she continues to wrongly think she’d have gotten more aid if you hadn’t claimed her, then don’t be surprised later if she conveniently can’t make the full payments each month on those loans. She may wrongly think that the loans are your fault.
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It’s a bummer that anybody has to take on so much student loan debt
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“Has to take”. No, that was a choice. Her choice to attend a private. Your wife’s choice to attend a private for her masters. Choices.
No, the wealthiest people do not pay the highest percentage of their income in taxes. High wage earners pay more than hedge fund managers or people that are so rich they make money investing money.
I used the term forgiveness as a general term, certainly if society puts pressure on government to help pay off loans, whether public or private, they can do that.
Until then, she / we are stuck with paying it back like everyone else.
If you borrowed the money, yes you must pay it back. If you feel that you can’t afford to repay it, don’t borrow it.
There are a lot of people who are not a part of the collective “like everyone else” because they made sure that their child attended a school that was a financially feasible option for their family and they did not co-sign any loans.
At your house, perhaps both your wife and your daughter are of the mindset that private is better. Perhaps they felt that this was the easiest school to commute to or gave them the least amount of hoops to jump through from an admissions standpoint. Whatever their reason, they both chose more the expensive school, which IMHO is not better that the affordable CUNY/SUNY options.
They chose to take out loans vs trying to attend a more affordable option. Now the time will come where they must pay the money back. Even on the very very very off chance that the loans would be forgiven, they would just become taxable income leaving you with multi-year repayment plans to the IRS (then you really will not be going on vacation because they will be taking all of your refunds until their debt is paid)
Whatever. Way off course anyway.
Thank you to those that answered my question without any kind of condescension or lecture.
By the way, if my step daughter theoretically financed $100,000 per year and it was all borrowed to be paid back in the future by her, cosigned by my wife, how would that factor in to the IRS living expenses for caculating if she is a qualifying child for tax purposes or not? I always figured that wasn’t calculated in because neither of us were paying for that yet.
http://www.thetaxadviser.com/issues/2010/aug/nichols-aug-2010.html
this article addresses some of that
Quoted from above website:
Gotta love tax code simplicity.
Here’s what seems stupid and not right…
Perhaps switching from a community college to a private 4 year school is / was the difference of being viewed as a dependent or not a dependent by the IRS, because these now larger student loans are in her name…putting her over paying more than 50% of her expenses (supposedly)…even though she lives at home and is by the very definition a dependent!
THEN she cannot take full advantage of education credits because she doesn’t earn enough?..
And since she no longer qualifies as a dependent child, according to the IRS, the parents can’t claim her and take full advantage of those education credits?..
And after all of this, unless she goes for her Masters degree she won’t be eligible for more financial aid (and less loan debt) based on these new “independent status” calculations because she is finished with school by the time the new caculations come in to play?
Am I getting this about right?
No, grad school is just loans, no financial aid.
The tax situation has nothing to do with financial aid status.
Dependent for taxes depends on who pays more support. It doesn’t matter if her expenses are $10,000 or $30,000 but who pays how much.
Dependence for financial aid depends primarily on age.
Yes, there are parts that are counterintuitive. Like the fact that a student can get a student loan interest deduction on their taxes once they pay back the loans, unless they earn too much.
Or that a student can’t claim independence for tax purposes if their support is paid all through scholarships, even if parents pay no support. Because they have to pay more than 50% of their own support with earned income, scholarships can’t be counted towards support.
If her expenses have gone up (higher tuition) so have her overall expenses. She’s still not paying half her own support. You have to consider earned income.
Why are you arguing that she is independent for tax purposes? YOU don’t want her to be, and she’s not, so why try to reason that she is?