By Fernando Rivera, CPA
Who owes student loans? Would you like to be forgiven or reduce them? 
If you owe student loans you should probably be interested in what the 2020 presidential candidates are proposing. Fortunately, for you, this is a hot debate because they realize that the inflationary effect on student tuition costs has led to Americans owing more student loans, and with higher amounts, than ever before. And, with these general inflationary times the repayment curve of these loans, for middle or poor class, has been practically impossible to satisfy. This issue has created an economic discriminatory barrier to access College for middle and poor classes because once they graduate they can’t afford to pay the actual monthly payment while keeping a minimum quality of life for them and their families. Don’t forget that forgiveness of a debt is a taxable event that depending on circumstances and on tax jurisdiction (federal, state) could be exempt or taxable. So it’s very important that you consider this tax effect, if any, and the new cash flow surplus, resulting from the forgiveness, on your financial planning.  Be smart. Plan…
 
The following is what actual 2020 presidential candidates are proposing to attain this important issue, taken from an article of Rebecca Safier posted by mediafeed.org. on 02/14/20:
 
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  • Eased student loan forgiveness for disabled veterans and removed tax liability on those discharged loans. Trump also called for states to waive state taxes on loans forgiven through “total and permanent disability discharge.” 
  • Discussed a single income-driven repayment plan to replace the current plans, such as Income-Based Repayment and Pay as You Earn. Trump’s proposed plan would cap monthly payments at 12.5% of a borrower’s income and offer student loan forgiveness after 15 years for undergraduates and after 30 years for graduate students.
  • Proposed eliminating subsidized loans, which don’t accrue interest during a grace period and are offered to low-income students.
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  • Cancel all outstanding U.S. student loans, totaling $1.56 trillion, regardless of borrowers’ income levels, a move which Sanders says would boost the economy by about $1 trillion over the next 10 years and create 1.6 million new jobs annually. He also says canceling student debt would give millions of Americans the resources they need to buy a home, purchase a car or start a small business.
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  • Simplify income-driven repayment plans, and allow student loan borrowers who make less than $25,000 to reduce their payments to $0 without accruing interest on their debt. Borrowers who make more than $25,000 annually would pay just 5% of their discretionary income (the current plans cap payments at 10% or more) and be eligible for forgiveness after 20 years.
  • Simplify the Public Service Loan Forgiveness program and allow eligible borrowers to get $10,000 in forgiveness annually for up to five years.
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  • Support students entering public service. This suggests he would support or possibly expand the Public Service Loan Forgiveness (PSLF) program.
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  • Expand the Public Service Loan Forgiveness program to ensure that in-demand occupations are eligible for loan forgiveness.
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  • Hasn’t officially shared his stance on student loan forgiveness.
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  • “Without guaranteed access to a good education, there’s no such thing as equal opportunity. Our government must protect the right to a free, quality, public education from preschool through college and on to skills training.”
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  • Reviewing the federal loan lending process to ensure students are not being lent exorbitant amounts.
  • Repealing the legislative provision that prohibits students from renegotiating their loans.
  • Expanding public service loan forgiveness options, particularly for public school teachers.
  • Reducing the interest rates on federal student loans, as well as exempting unpaid interest until a borrower is making 250% of the wage at the federal poverty line for up to three years.
  • Forgiving student loan debt after 240 monthly payments.
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  • Mass student loan forgiveness. Warren proposed forgiving up to $50,000 in federal student loans for all borrowers with a household income of $100,000 or less. Her plan would offer partial forgiveness to those who make between $100,000 and $250,000, and no forgiveness to those who make more than $250,000. Implement the “Ultra-Millionaire Tax.” Warren said her debt cancellation and universal free college plan would be funded with a 2% annual tax on the 75,000 U.S. families who hold $50 million or more.

-mybusinessbid.com