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Will new GOP proposal cut deductions re student debt interest?

| Nov 9, 2017 | Firm News, Personal Bankruptcy

What one hand gives, the other takes away.

That well-known saying might logically come to mind for many Arkansas residents and their fellow Americans across the country in the wake of many tax-related recommendations recently offered up by Congress.

Specifically, those provisions were authored in the U.S. House of Representatives on the Republican side, and potentially affect scores of millions of individuals and families in significant ways.

That word “potentially” is important, given that a huge new tax bill advanced in the House last week is at the working stage and likely to undergo considerable tweaking before — and if — it becomes law.

The “one hand gives, one hand takes” reference above relates to the fact that, as House Speaker Paul Ryan states, some existing tax deductions must be wiped out in order to advance others that legislators say are broadly important.

On the chopping block potentially is this: the student loan interest tax deduction that is currently claimed by many millions of Americans.

Many of those individuals face hard challenges paying back large loans coupled with ballooning interest payments, and have been thankful for the chance to annually claim back a portion of the interest amount.

Their ability to do so could end soon, with President Trump vowing to sign the sweeping tax bill into law “before Christmas.”

Critics of the deduction cite the approximately $2 billion in lost revenue that it costs the government each year.

Legions of supporters across the country counter, though, that the deduction offset is critically important for many people to stay financially above water and avoid life-changing economic adversity. Without it, they contend, some individuals will forgo educational opportunities and not be able to contribute as well to the country’s general economic prosperity.

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