Graduation can be a time of celebration. At graduation, however, the true challenges and opportunities arise. These typically range from exploring new employment opportunities to attempting to satisfy various debt obligations that have been lurking around the corner since high school.
A new challenge can be found in the area of student loan debt, which can seem to nurses or other young adults to be quite overwhelming. It is commonly not sufficient just because the pay scale has increased. The money owed can often be enormous, and the interest that is derived from this debt is usually astronomical.
Most of the young adults that enter graduate school do not expect to be in a position to take on such heavy debt. Often, the reality is somewhat starker. This debt needs to be dealt with in a manner that best suits the budget. In view of this, it is all too common for graduate students to pay Statements to the Internal Revenue Service (IRS) after being deemed capable of repayment.
When it comes to applying to write off student loan debt through the Offer in Compromise (OIC), one must remember that IRS guidelines state that a taxpayer can’t pay off the entire amount of the IRS tax bill that is owed. The IRS is entitled to a receive payment, but taxpayers can not pay in full unless the rest of the debt can be forgiveness. Forgiveness of student loan debt requires a compromise agreement between the IRS and the taxpayer. In certain instances, the student loan debt can be reduced through other negotiating techniques.
From the student’s perspective, the idea of having to condense every student loan debt they have incurred seems reasonable. Fortunately, there are programs from the federal government that can help student debtors meet the requirements of the OIC and discharge student loans. The Stafford Loan Forgiveness Program and the Unsubsidized Stafford Loan Forgiveness Program are relatively easy to qualify for.
For students, however, the best approach has always been to stay current on payments and to avoid defaulting. This is where the biggest challenge facing debtors really comes into play. To be eligible for these debt relief programs, debtors must be current in their payments combined with the entire amount of the outstanding debt. In many cases, there will not be a big hit to the tax burden, but the credit will be somewhat diminished as a result of the default. In some cases, the students will have to forfeit their credit cards.
In many instances, nothing less than the debt will have to be retained. There can be no tax debt relief whatsoever. Any amount discharged in student loan debt is considered taxable income.
Debtors that receive a valid Financial Education Service Review (FES) all too frequently find that there is nothing more that the federal government can do to assist them. Even if all debtors default, the government lacks the ability to discharge student loan debt except in extreme circumstances. This is not good. The vast majority of the cases in which debtors have defaulted on a student loan have been the result of the student declining in educational caliber. There are other instances where debtors were unable to obtain gainful employment following graduation.
Debtors that have their student loan fall into default must use current financial conditions to their advantage. This is a dangerous road to go down.
An example is if one was taking out a consolidation loan. Debtors should realize that the interest rate that will accrue over the length of the loan is on par with the highest interest rate that one would pay on a credit card. Given this fact, defaulting on a student loan does not make sense. When student debtors ignore such obligations, they run the risk of lowering their credit rating. Credit becomes critical to survival, and education provides a foundation for future success.
If the debtors are able to obtain a deferred repayment loan, they should utilize such a benefit to not only reduce the amount of cash payable, but also the amount of interest that is paid over the course of the loan. Defaulting on a deferred repayment loan may cause the debtors to pay much more in interest than would otherwise have been charged.
This will not only Firmly Build Up the Debtors Credit, but will also force the creditors to consider perspective and provide relief while creating an opportunity for the young person to capture some of their life with relative ease. However, this can only occur when it is understood that a debt management is a much better option than defaulting.