peggysioux5 Posted February 7, 2016 Report Share Posted February 7, 2016 Taxpayer has been going to college for several years and began paying on her student loans in 2015. She also entered into one of Obama's Student Loan Forgiveness Programs in 2015. She received two 1098-E statements totaling over $7000. She definitely did not pay that interest in 2015; however it appears that the new loan company under the forgiveness program paid the interest to the original loan holders. Normally, if she had not entered into a loan forgiveness program and refinanced her loans, that interest would be deductible being she technically paid the interest in the refi which she will pay off during the length of the loan. I would not think the interest is now deductible due to the forgiveness program. However, she said she is paying interest on her current loan so shouldn't some of the interest be deductible. Do any tax preparers have a cite reference that clearly states how to handle this situation? Quote Link to comment Share on other sites More sharing options...
Jack from Ohio Posted February 8, 2016 Report Share Posted February 8, 2016 I was not aware that an "Obama's Student Loan Forgiveness Program" was even in existence? This doesn't pass the smell test. Am I just uninformed, or do others get the feeling this is not a legit program? Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 8, 2016 Report Share Posted February 8, 2016 56 minutes ago, Jack from Ohio said: I was not aware that an "Obama's Student Loan Forgiveness Program" was even in existence? This doesn't pass the smell test. Am I just uninformed, or do others get the feeling this is not a legit program? AKA "Pay As You Earn" :http://www.smarterschooling.com/colleges/obama-student-loan-forgiveness-program-paye/ or this link as some info on it too: https://studentaid.ed.gov/sa/sites/default/files/income-driven-repayment.pdf Quote Link to comment Share on other sites More sharing options...
peggysioux5 Posted February 8, 2016 Author Report Share Posted February 8, 2016 And the taxpayer is working for a non-profit so she will only have to pay on the loan (based on her income) for a total of 10 years. Very generous program. But I am still trying to find a cite that helps me determine if the any of the interest would be considered deductible. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 8, 2016 Report Share Posted February 8, 2016 22 hours ago, peggysioux5 said: Do any tax preparers have a cite reference that clearly states how to handle this situation? Pub 970 should give you a starting point for your further research. Page 30 covers student loan interest, interest on loans refinanced that are consolidated or collapsed (interest would be nondeductible), and page 37 has the section on loan forgiveness and when it is a taxable or nontaxable event. It doesn't specifically mention the PAYE program but does include a "caution" that interest paid on loans that are forgiven under other programs is nondeductible. Quote Link to comment Share on other sites More sharing options...
peggysioux5 Posted February 11, 2016 Author Report Share Posted February 11, 2016 Thanks Judy - very helpful. Peggy Sioux Quote Link to comment Share on other sites More sharing options...
Lee B Posted February 22, 2016 Report Share Posted February 22, 2016 Interesting, just read an article explaining a number of ongoing scams promoting this program, where you are asked to pay hundreds of dollars in advance so the scammer promises to get your loan modified or completely forgiven. In addition some of these scammers collect your personal information and then resell it to others. If it sounds too good to be true ? Just like Bernie Madoff's 12 % guaranteed investment returns 1 Quote Link to comment Share on other sites More sharing options...
SaraEA Posted February 22, 2016 Report Share Posted February 22, 2016 Had a client come in yesterday who asked if I knew anything about student loan forgiveness. He showed me a message on the topic he had on his cell phone. Just so happens I did hear about that program.....on the 11:00 news. Quote Link to comment Share on other sites More sharing options...
jklcpa Posted February 22, 2016 Report Share Posted February 22, 2016 On 2/21/2016 at 7:05 PM, cbslee said: Interesting, just read an article explaining a number of ongoing scams promoting this program, where you are asked to pay hundreds of dollars in advance so the scammer promises to get your loan modified or completely forgiven. In addition some of these scammers collect your personal information and then resell it to others. If it sounds too good to be true ? Just like Bernie Madoff's 12 % guaranteed investment returns On 2/21/2016 at 9:31 PM, SaraEA said: Had a client come in yesterday who asked if I knew anything about student loan forgiveness. He showed me a message on the topic he had on his cell phone. Just so happens I did hear about that program.....on the 11:00 news. There may be scams related to the program, and there are companies asking for upfront fees too, but the program itself is real. The link here is directly to the White House website, indicating that this program was part of the Health Care and Education Reconciliation Act sign into law in 2010. Quote Link to comment Share on other sites More sharing options...
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