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Compromise acceptable

July 24, 2013

A compromise on student loans is set to be approved in the U.S. Senate. But even as lawmakers revealed an agreement, some hinted they may try to go back on it this fall....

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Scarecrow57

Jul-24-13 12:04 PM

First, we all agree (I think we do) that the better educated the society is the better all of society will be. If we can agree that education is a good thing then we have to ask is it acceptable for the government to make a profit off of educational cost. If the answer is no then why should there be any interest on these loans at all.

Secondly, these student loan payments should be tax deductible (I+P). Why??? If a person gets an education and gets a job paying $80,000 a year they should be able to deduct the cost of earning that salary. After all, you are already in a higher tax bracket; which means the government makes even more money of of your hard work.

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DaveGibson

Jul-24-13 12:10 PM

This editorial was going pretty good until this;

"LIBERALS (emphasis mine)in Washington claim it will be devastating to many students. That probably is not the case for most students. One estimate is the increase would add ONLY ABOUT (emphasis mine) $2,600 to the 10-year cost of a typical student's loans."

Only $2600? This "conservative" acts like this is chump change.

So let me get this right. If you fight to save Americans money, you're a liberal? And if you don't care that Americans have to pay more for student loans you're a conservative? Isn't that supposed to be the other way around?

So conservatives fight for tax cuts for the wealthy, but vote for loan increases for students. I don't get it.

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Pards13

Jul-24-13 12:58 PM

Ahem, $2600 divided by 10 years equals $260 per year divided by 365 equals about 72 cents ( I rounded up) or less than a cup of coffee. That being said many loans can be wiped out by working in qualified jobs and locations. I do believe that if we can pay over inflated salaries to some high mucky mucks then we can have lower interest rates for students. FYI my kids have to pay 6.8% and they are very happy to be able to.

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rschweizer

Jul-24-13 1:05 PM

Uh, Scarecrow57, student loan interest already is tax-deductible. And it's not for the reason you state. Not even close.

I could tell you from my professional experience why student loan interest is tax-deductible, but you'll just go into some incredulous tailspin.

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Scarecrow57

Jul-24-13 1:14 PM

DaveGibson - $2,600 is chump change if you study hard, pick the proper career field, and land a good job. If you chose Political Science, journalism, Asian studies, etc. It is a lot fo money.

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Scarecrow57

Jul-24-13 1:19 PM

@rschweizer - The interest is tax deductible if you chose a poor path of study and end up in a low income job. if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education.

We don't all get the deductions.

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adkkev

Jul-24-13 1:28 PM

Scarecrow ... could you lend your crystal ball to the upcoming high school senior classes for our local schools? I'm sure many of them would like to know how to pick the "proper career field" before heading to college (if that's their intention).

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DaveGibson

Jul-24-13 1:29 PM

In many countries, public education continues right through college, and graduates leave with no student loan debt. Why? Because it's good for their economies. Graduates become instant consumers and can buy a new car, a house, or start their own businesses.

Norway, the most prosperous country in the world, does this.

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TiredOfTax

Jul-24-13 1:29 PM

$2600 is chump change over the life of a loan. People that benefit from these loans should be willing to pay them back. Many in the past have blown them off as they refused to pay or many times even work in their chosen field. Our government is willing to waste money in many ways and even education is a heavily subsidised redistribution of taxpayer money!

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Patriot1

Jul-24-13 1:37 PM

Online classes are beginning to replace "on-campus" classes at a much lower cost. Look for this trend to accelerate dramatically.

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Scarecrow57

Jul-24-13 2:45 PM

adkkev - Scarecrow ... could you lend your crystal ball to the upcoming high school senior classes for our local schools? I'm sure many of them would like to know how to pick the "proper career field" before heading to college (if that's their intention).

Google is your Friend. Try a Google search for top paying careers. The data is out there, all you have to do is look

hxxp://www[dot]becomecareer[dot]com/highest-paying/50-best-and-the-degrees-you-need-for-them

No Crystal Ball needed. I recommend you avoid a graphic arts curriculum.

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Scarecrow57

Jul-24-13 2:46 PM

Patriot1 - In many cases, the online classes cost as much as the on site courses.

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rschweizer

Jul-24-13 2:52 PM

Scarecrow57, what on earth are you talking about? Interest on ALL student loans is tax-deductible and regardless of how much money you earn.

The differentiating factor is how much of that deduction applies.

I feel like you're confusing 'all student loan interest is deductible' with the actual 'all interest on student loans is deductible.

As an example, I paid about $2600 last year between undergrad and grad loan interest. The banks you pay to, by law, issue you a 1098E if the interest is more than $600. You take those to your accountant who combines it with your other deductions.

This does not mean that just because I paid $2600 in interest that I get a full $2600 shaved off my tax bill.

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rschweizer

Jul-24-13 2:57 PM

Scarecrow57, stay AWAY from online schools. The mantra they run on is for-profit and couldn't care less about the quality of education they dish out. This is opposed to traditional non-profit schools known for quality education.

There is a allegation out of Schenectady where a woman manager paid an employee to take her masters' courses for her. Her company ordered her to pay back her earnings she got after her promotion instead of face criminal charges of fraud. This de-values the quality of education online schools have to offer.

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TheArchitect

Jul-24-13 10:09 PM

The real problem is that college tuition is just plain too high. In a time where most graduates are unable to find employment in their career field, borrowing several hundred thousdand dollars, regardless of the interest rate makes, no sense for most.

For what many colleges provide in the way of undergraduate education, with many courses being taught by teaching assistants who are working on graduate degrees, the cost cannot be justified. Its a challenge though since most high school graduates are so poorly educated and have limited learning skills and potential, given the poor public education system.

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drugsrus

Jul-24-13 10:54 PM

swizzer - "traditional non-profit schools" ???? and which ones would they be ???? All places of higher learning are for profit and I'm quite sure that the quality of education has a bunch to do with how much the "student" applies him/her self.

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Scarecrow57

Jul-25-13 10:15 AM

RS, I am talking about I could not deduct my student loan interest last year because I made too much.

I refer you to IRS tax publication 970 "Tax Benefits for Education" Section 4

Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $75,000 ($155,000 if filing a joint return) there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500 in 2012.

hxxp://www[dot]irs[dot]gov/publications/p970/ch04.html

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Scarecrow57

Jul-25-13 10:18 AM

"Scarecrow57, stay AWAY from online schools. The mantra they run on is for-profit and couldn't care less about the quality of education they dish out. This is opposed to traditional non-profit schools known for quality education."

Online schools are no different than brick and mortar schools. They all run for profit. You can fail online classes just as easily as easily as you can at FMCC. Although FMCC makes it almost impossible to fail.

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Scarecrow57

Jul-25-13 10:19 AM

@TheArchitect - The problem is the colleges know they will get paid no matter what because the government makes all of this money available.

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BEREAL64

Jul-25-13 11:21 AM

In order to achieve the $2,600 difference over the lifetime of a 10 year loan, the loan amount would be $13,000. In a previous editorial the low ball number used was an average of $26,000. Most graduates from a 4 year school are carrying an average of $40,000 - $50,000 in debt. Using $40,000 the difference between 3.4% and 6.8% is $8,000. The amount of debt is even higher with a post graduate degree. If you look at the teaching profession, they are required to have a master’s degree within 5 years of graduation. Using the $2,600 is a smoke screen to the true cost of doubling the interest rates. Variable rates amount to gambling the rates will stay low for 10 years. Graduates are looking at a lean job market and don’t need to worry about the government coming along and taking more of their money because the economy gets a little better. Conservatives are constantly pushing for the upper 10% to get tax breaks but are more than willing to stick it to middle class individuals sta

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BEREAL64

Jul-25-13 11:22 AM

starting a career with student loans.

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rschweizer

Jul-25-13 12:38 PM

drugsrus, not all colleges/uni's are non-profit. I'd say 99% are. I think you need to learn your facts.

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drugsrus

Jul-26-13 11:34 AM

swizzer, 99% are what??? I'll take your tactic - Name one non-profit school so I can look into it.

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taxtired

Jul-26-13 12:14 PM

I see rs is still in his dream world.

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rschweizer

Jul-26-13 1:15 PM

drugsrus, are you on drugs?

Syracuse Siena St. Rose Union RPI Skidmore Colgate Hamilton Hartwick Notre Dame UPenn Cornell Harvard Yale Columbia Dartmouth Brown Stanford Duke Wake Forest Marquette St Johns Georgetown Fordham Chicago

I'm beginning to think drugs are the least of your proboems.

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