If you are one of the ~44 million Americans who have student loan debt, you could be affected by the proposed elimination of a deduction in the Tax Cuts and Jobs Act.
According to the IRS, more than 12 million taxpayers claimed a deduction on student loan interest in 2015. A max of $2,500 a year can be claimed as an above-the-line deduction under current law – the equivalent of $625 in reduced tax liability.
Experts predict the proposed changes would hit young professionals particularly hard.
Some of the GOP’s ideas include taxing as income the tuition that is waived for graduate students + levying an excise tax on large private college endowments.
The federal government lost $2 billion in forgone revenue to student loan interest deductions in 2016. Some predict that the proposed cut would allow the government to collect more revenue, potentially providing more money for higher education, and thus, helping to reduce overall debt - essentially exchanging deductions + exclusions for lower tax rates.
