We have all heard the horror stories about student loans. We are told for years that we should go to college in order to learn the skills necessary to get out into the workforce and do well. And while there are many great opportunities that come from going to college and making those connections while getting an education, the student loan crisis is getting worse than ever. With the current average student loan debt at $37,000 and rising each year, many students wonder if they are making the right decision with going to college and if they will ever get those student loans paid off.
Luckily, there are some choices that you can make that will help to get those student loans paid off even after school. Often it is all about choosing the right career that works for you and will allow for a discharge of the loans that you have accumulated. While you may need to be a bit flexible about your career choices, there is a lot of variety and you simply need to give up your time, while working and getting paid, to get those loans paid off.
Picking a Profession
The profession that you pick is going to have the biggest influence on whether or not you can get your student loans discharged. Professions that are really low on personnel but need people right away will often be the most likely to offer this benefit as an enticement. For example, individuals who are looking to go into a medical career or who want to become teachers are the most likely to get this kind of incentive because there is a high need for those in this profession.
Keep in mind that in order to get the student loan relief benefit, you are often going to be limited on the location. While some places may offer the benefit no matter what, there are many times when it is really pushed in areas that are in high demand. For example, reservations and rural areas have a hard time getting teachers and doctors to the area, so they will be the most likely to offer this benefit to entice new professionals to help out. The pay is often going to be a bit lower, but with your student loan deductions is may be worth it.
Teacher and medical professions are just two of the most common professions that will help to pay off your student loans, but there are more. Many of these are high need areas as well. If you work in any school or medical setting or in a high need area you could get the deduction as well as when you work for a government organization. If you are considering going into a profession like one of those above, make sure to talk to your tax professional to learn some of the tax implications that could come over time from this decision.
Picking a Location
Sometimes it is not always about the profession that you pick, but also the area where you agree to work. There are many states that are offering incentives for young adults to stay within the state. If you agree to go to college in the state and then spend a number of years within the state after you graduate, you may be eligible to get all or part of your student loans paid off. The states figure this creates a sense of goodwill with the students and once the students have stayed within the state for a few years, they are much more likely to continue living there and spurring on the economy of that state rather than leaving.
There are often some requirements that need to be met. Many time the state is only going to offer this to individuals who are from the state before starting college, or at least to students who are living in nearby states. There are often other requirements such as certain careers that are low on workers at the time. If you are fine with living in one area for a few years after graduation and find one of the career choices appealing, this can be a great way to reduce the amount that you owe on student loans.
Tax Issues with Loan Discharge
When you get your loans discharged by the government while working in a specific field, there are some tax implications that you need to keep in mind. To start with, the IRS is going to expect you to count the full amount of the loan discharge as your income, even though the money was not paid directly to you. This is something that surprises a lot of individuals and could really raise your tax amount. But if you work with a tax professional, you may be able to learn how to reduce the amount that you owe. Even if you need to pay a bit more in taxes at the end of the discharge year, it might be worth it rather than spending another twenty years trying to get them paid off.
There are so many times when it could be helpful to work with a tax professional. They have the knowledge to make tax time easier and will answer all of your questions while finding you the most deductions and credits possible. Contact our offices today to find a tax professional in your area!
