Archive for December, 2012

December 31, 2012

Take a grammar quiz to see if you should be concerned about ‘grammar gaffes’

by Grace

Grammar problems are plaguing business communication.

Managers are fighting an epidemic of grammar gaffes in the workplace. Many of them attribute slipping skills to the informality of email, texting and Twitter where slang and shortcuts are common. Such looseness with language can create bad impressions with clients, ruin marketing materials and cause communications errors, many managers say.

Employers are teaching the writing skills that should have been learned in school.

There’s no easy fix. Some bosses and co-workers step in to correct mistakes, while others consult business-grammar guides for help. In a survey conducted earlier this year, about 45% of 430 employers said they were increasing employee-training programs to improve employees’ grammar and other skills, according to the Society for Human Resource Management and AARP.

Some employers believe the old rules of grammar are irrelevant in today’s business environment.

… Sincerity and clarity expressed in “140 characters and sound bytes” are seen as hallmarks of good communication—not “the king’s grammar,” says Jason Grimes, 38, vice president of product marketing. “Those who can be sincere, and still text and Twitter and communicate on Facebook—those are the ones who are going to succeed.”

Two of my grammar pet peeves are using “I” instead of “me” and the overuse of “myself”.

To Melissa Wilde of Brooklyn, hearing people say, “’Come to the movies with John and I’ sounds like fingernails scraping a chalkboard,” she writes in an email. While Stephen VanderBloemen, Waukesha, Wis., objects to business letters that close with the sentence, “If you have any questions, please call myself.”

How is your grammar?  Take the WSJ GRAMMAR QUIZ.

I’m feeling proud after getting 20 out of 22 correct, even though the test was not very hard.  I hope writing this blog has helped improve my writing skills.

After you take the quiz, you can celebrate your high score or bemoan your poor grammar with a drink.

Here’s an appropriately named whiskey that I’ve been enjoying recently.

201212.eDecPhotosMisc1

Unfortunately, as far as I know you cannot buy Writers Tears in the United States yet.  I was fortunate to receive a bottle from a relative who just returned from Ireland.

“Ireland has been blessed with great poets, and playwrights down through the centuries. However, most, if not all of our great writers suffered from writer’s block. Many sought comfort and inspiration from “the water of Life”… whiskey. It was said that when an Irish writer cried, he cried tears of whiskey.

Writers Tears is a salute to these great writers with a style of whiskey that was popular in Joyce’s Dublin…”

Shouldn’t there be an apostrophe in “Writers”?

This grammar issue is mentioned in some reviews of the whiskey, and there seems general agreement that an apostrophe is needed.  Here’s one discussion on the relevant grammar rule.

Possessives versus Adjectival Labels

Don’t confuse an adjectival label (sometimes called an “attributive noun“) ending in s with the need for a possessive. Sometimes it’s not easy to tell which is which. Do you attend a writers’ conference or a writers conference? If it’s a group of writers attending a conference, you want the plural ending, writers. If the conference actually belongs to the writers, then you’d want the possessive form, writers’. If you can insert another modifer between the -s word and whatever it modifies, you’re probably dealing with a possessive. Additional modifiers will also help determine which form to use.

  • Patriots quarterback Drew Bledsoe threw three touchdown passes. (plural as modifier)
  • The Patriots’ [new] quarterback, Drew Bledsoe, threw three touchdown passes. (possessive as modifier]

I run into this “possessive versus adjectival” issue whenever I write about teachers’ pensions.  Or is it “teacher pensions”?

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December 28, 2012

Under New York 2% tax cap, protected pensions will cause even more cuts to student services

by Grace

In New York, public schools are struggling with rising pension costs and a 2% tax cap as they plan for next year’s budgets. As the situation becomes desperate, one official warns that school security may suffer. 

School districts face a daunting challenge as they begin drafting budgets for 2013-14: Rising pension costs alone could eat up most or all of their allowable tax-levy increase under the state’s tax-levy cap.

“It’s debilitating for us, terrible,” said Thomas DePrisco, a member of the Pearl River Board of Education.

Pension costs will increase nearly 40%, forcing cuts in student services.

District contributions to the pension system for teachers and administrators are expected to rise close to 40 percent next year. This increase could translate into hundreds of thousands of dollars for small districts and several million for larger districts, which will require raising the tax levy by 2 percent or 3 percent in most districts.

Since the state cap starts at 2 percent before adjustments, most districts will not be able to increase spending in other areas, from health insurance to curriculum materials, without making equivalent cuts to programs and staff.

Students are being punished.

“The numbers are punitive, a shocker,” said Kendall Egan, a member of the Rye school board and president of the Westchester-Putnam School Boards Association. “You’ve already filled up your cap. It’s hard to make your community understand that there is so much out of the control of a school board. We’ll be back to going line-by-line through our budgets, looking for all possible savings.”

Pension contributions will increase to about 16% of payroll costs.

Under state law, all school districts outside of New York City must contribute a percentage of their payroll each year to two pension systems, one for teachers and administrators, and one for support staff. The percentages are determined by the two systems’ past investment performances. Next year’s contributions are tied to the period between 2007-08 and 2011-12, when investment returns were down.

The New York State Teacher Retirement System recently notified districts that it expects to raise their 2013-14 contribution to between 15.5 percent and 16.5 percent of payroll, up from 11.8 percent of payroll this year. The employer contribution has varied between 6 and 9 percent of payroll in recent years.

The TRS fund, which pays pensions to retired teachers and administrators, has $88 billion in assets. It is paying benefits to almost 150,000 people, up from 100,000 in the year 2000. Its active membership — those who will receive future benefits — has increased from 225,000 people in 2000 to 277,273 this year.

Schools will start with a deficit.

The Valhalla school district expects to increase its Teacher Retirement System contribution by about $930,000 to more than $3 million, while its Employees Retirement System contribution will rise by about $91,000. These increases alone will require raising the district’s tax levy by about 2.5 percent.

“We start the budget planning process in a deficit and wonder how we’ll stay under the cap,” Superintendent Brenda Myers said.

Teachers’ pensions were protected under the property tax cap legislation but student services were not.

The property-tax cap, going into its second year, starts by limiting tax-levy increases to 2 percent, but the number can go up or down depending on several factors. Pension cost increases over 2 percent are exempt from the cap, which is little consolation for districts that are up against the cap anyway.

Politician wants to give teachers even more protection.

Assemblywoman Ellen Jaffee, D-Suffern, said she is considering proposing legislation that would exempt additional pension costs and perhaps tax certiorari payments from the cap.

“It could help stabilize the situation,” she said. “There are very real concerns about districts facing insolvency.”

‘rising pension and health care costs’ leading to ‘dangerous territory’

Ken Slentz, deputy state commissioner of education, said that rising pension and health care costs will result in people losing their jobs so districts can stay under the cap.

“Where are we headed?” he said. “Dangerous territory.”

Recent pension reform had little effect.

A key factor is that 86 percent of all teachers and administrators statewide are in Tier 4 of the pension system, meaning that they contribute 3 percent of their salary to the system for only 10 years and nothing thereafter. Tiers 5 and 6, created since 2009, require ongoing employee contributions but currently include only 8 percent of all members.

In a low blow that may have been meant to evoke fears related to the recent tragedy in Newtown, one official intimates that school security may suffer.

“The impact on our budgets is devastating,” Burrell said. “If we can’t raise tax levies, and taxes are already too high for many people, districts will have to make uncomfortable choices. Will districts have to choose between AP classes and security?”

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December 27, 2012

College merit aid is unfair according to some critics

by Grace

College financial aid awarded on the basis of academic merit is wrong according to critics who believe schools should only offer scholarships based on financial need.

The University of Oklahoma has a particularly aggressive program of recruiting National Merit scholars for its scholarship program, enrolling about 200 each year.

Oklahoma’s program touches on a long-running argument within higher education, about the role of “merit aid” — scholarships that schools give on the basis of credentials like grades, test scores or musical skills — versus the aid that nearly all schools give on the basis of a student’s financial need. Most colleges give some academic merit aid (though some of the wealthiest and most selective schools do not), and the amount has increased over the years as competition for top students grows more fierce. Oklahoma’s honors program is an extreme example.

Questioning who exactly benefits from merit aid

“There are those, me included, who say the purpose of aid should be to help people go to college who might not be able to otherwise,” said Donald Heller, dean of the College of Education at Michigan State University. “Giving merit scholarships to kids who would have been going to college anyway can benefit the institution without necessarily benefiting the broader public.”

Should state schools be spending money to attract smart students?

The dispute is especially sharp when it comes to state schools, which face dwindling resources and are seen as having a public service mission, but it is largely confined to those who study education policy. Oklahoma’s program draws little other fire, on or off campus, even given that about half of the National Merit scholars come from out of state.

Some arguments in support of merit aid

“Having these kinds of classmates motivates other students, it elevates class discussions, it’s a recruiting tool when we go after new students or faculty,” said David Ray, a political science professor and dean of the Honors College. “We don’t just throw money at them to get them here; we give them unique opportunities once they’re here.”

Merit aid is distasteful to some because it may perpetuate a type of elitism, but the benefits of rewarding and grooming high-performing students seem like a no-brainer to me.

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December 26, 2012

Quick Links – more homeless young adults; reports on trends in college financial aid

by Grace

◊◊◊  Growing number of homeless young people is tied to high unemployment rate.

Across the country, tens of thousands of underemployed and jobless young people, many with college credits or work histories, are struggling to house themselves in the wake of the recession, which has left workers between the ages of 18 and 24 with the highest unemployment rate of all adults.

Exact numbers are hard to come by, but some cities have tried to measure the trend.

Boston also attempted counts in 2010 and 2011. The homeless young adult population seeking shelter grew 3 percentage points to 12 percent of the 6,000 homeless people served over that period.

In some cases, a reluctance to move in with parents seems to be the reason for living on the street.  One homeless shelter director describes this group as “high functioning but who’ve been unable to stay on their feet” and “not been able to launch themselves into a successful young adulthood”.

After Recession, More Young Adults Are Living on Street (The New York Times)


◊◊◊ 
 Trends in Student Aid 2012 – College Board

Trends in Student Aid, an annual College Board publication since 1983, is a compendium of detailed, up-to-date information on the funding that is available to help students pay for college. This report documents grant aid from federal and state governments, colleges and universities, employers, and other private sources, as well as loans, tax benefits, and Federal Work-Study Assistance. It examines changes in funding levels over time, reports on the distribution of aid across students with different incomes and attending different types of institutions, and tracks the debt students incur as they pursue the educational opportunities that can increase their earnings, open doors to new experiences, and improve their ability to adapt to an ever-changing society.

Selected Highlights

  • In 2011-12, undergraduate students received an average of $13,218 per full-time equivalent (FTE) student in financial aid, including $6,932 in grant aid from all sources, and $5,056 in federal loans.
  • Federal grant aid almost tripled in constant dollars between 2001-02 and 2011-12, increasing from 20% to 26% of the total 185.1 billion in undergraduate aid.
  • Only 2% of students who first enrolled in 2003-04 had borrowed more than $50,000 from federal and nonfederal sources combined by 2009. Over 40% did not borrow and another 25% borrowed $10,000 or less.


◊◊◊
 
 Merit Aid for Undergraduates: Trends from 1995–96 to 2007–08 (National Center for Education Statistics)

This Statistics in Brief uses nationally representative data from 1995–96, 1999–2000, 2003–04 and 2007–08 to examine trends in merit aid to undergraduates by student and institutional characteristics and in comparison to need-based grant aid.

December 25, 2012

‘What Families Can Do When a Child May Have a Mental Illness’

by Grace

From the National Alliance on Mental Illness (NAMI):

If you are worried about your child’s mental health, follow your instincts. Unexplained changes in a child’s behavior and/or mood may be the early warning signs of a mental health condition and should never be ignored.

There are many different types of mental illness, and it isn’t easy to simplify the range of challenges children face. One way to begin to get a handle on this question is to get an evaluation of your child or teen by a licensed mental health professional.  Because all children and youth are unique and the local mental health services, insurance coverage and school services vary a great deal from community to community, it is a challenge to find the right kind of help for your child.

Like many others, my family has had to deal with this issue.  You can read more about different types of mental illness and what steps parents can take to help their children at the NAMI website.


Have a joyful and peaceful Christmas.

 

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December 24, 2012

Public college costs are rising, but still remain a good deal for some families

by Grace

The Wall Street Journal highlights the reasons why public college costs have soared over the last decade, increasing an inflation-adjusted 45% from 2000 to 2010.  At the same time, the situation for many middle-class families is not as dire as it is sometimes portrayed.

Reasons for escalating costs point to the dual problems of lower revenue and runaway spending.

Although state funding has increased over the years, it has failed to keep up with growing enrollment.  Scarce state resources have increasingly been directed to other needs, including Medicaid, prisons, and K-12 education.

Other factors are rising administrative costs, fancy facilities, and lower teaching loads

A number of factors have helped to fuel the soaring cost of public colleges. Administrative costs have soared nationwide, and many administrators have secured big pay increases—including some at CU, in 2011. Teaching loads have declined for tenured faculty at many schools, adding to costs. Between 2001 and 2011, the Department of Education says, the number of managers at U.S. colleges and universities grew 50% faster than the number of instructors. What’s more, schools have spent liberally on fancier dorms, dining halls and gyms to compete for

The University of Colorado at Boulder, like many other schools, is bringing in more foreign students to help the bottom line.

In 2010, officials persuaded lawmakers to exclude foreign students from the cap on out-of-staters—currently 45% of freshmen—arguing that the foreigners would add more global perspective. But they also covet the additional revenue, which officials estimate at $30 million a year. This year, CU is dispatching recruiters to more than a dozen countries, from Latin America to the Middle East.

Others are pursuing the same strategy. At Purdue University, 17% of undergraduates are from outside the U.S., mostly from China, up from 9% in 2009. At the University at Illinois, 13% of this year’s freshmen are foreign students.

Entitlement mentality?

Despite tales of woe, many schools are still affordable for middle class families if they plan ahead.  The Joiner family featured in the WSJ article is paying college costs similar to what Mr. Joiner incurred 25 years ago, yet they seem to feel entitled to a better deal.

Akaysha Joiner, the Aurora girl whose father attended CU in the 1980s, graduated at the top of her high-school class. When she applied, her father was making about $71,000 a year and her mother was temporarily out of work. CU offered her two grants totaling $7,400 and a $5,000 loan, which would cover slightly more than half the annual cost.

Mr. Joiner says that he hadn’t set aside money for Akaysha’s education and was surprised she hadn’t been offered more aid because of her top class ranking, the fact that he and his wife are alumni and that she is the child of a black parent and a Hispanic parent. “I don’t know that I expected a full ride,” he says. “But I had no idea [our payment] was going to be that high….

By fall, Akaysha had won $2,500 in non-CU scholarships, an additional $700 CU scholarship and a work-study job. That left the Joiner family owing about $9,000 for the year, including the cost of the loan. That is similar to what her father paid 27 years ago without any aid, after adjusting for inflation. Her grandfather gave her $4,000 to help out.

Mr. Joiner says the experience has left him wondering whether his two younger children will even “be able to go to a state school—forget about out-of-state.”

Criticism in the comments points out that this case is not such a hardship and Mr. Joiner seems to expect too much.

It didn’t occur to Mr. Joiner to save for his kids education just in case? Even with all of the media reports on soaring college costs?…

He thought she was going to get more preference because “she is the child of a black parent and a Hispanic parent”? But both parents are college graduates…upper-middle class by any sociological definition…why should she be entitled to any preference for her race? Typical liberal mentality…everyone is the member of some victimized special interest and entitled to have society pay her way.

December 21, 2012

K-12 online learning may be unproven, but it is on the rise

by Grace

After suffering bigger class sizes as the result of laying off about 95 teachers due to budget cuts, the Manchester New Hampshire school district is looking to add online classes.  Although the benefits are unclear, this is part of a trend that appears unstoppable.

Officials, seeking an overhaul, began to wonder if a 21st-century technology might help allay their struggles: having some students take courses online during the school day, without a teacher physically present.

But a plan to institute “blended learning labs,” which allow students to do just that, is stoking concern among parents and teachers. Some doubt the efficacy of online learning. Others say the proposed solution barely scratches the surface of systemic problems here.

Virtual labs and remote classrooms

The plan, which Superintendent Thomas J. Brennan Jr. presented to the district’s school board last month, would expand the district’s current use of New Hampshire’s online charter school, the Virtual Learning Academy, by putting a virtual learning lab in each of the district’s three high schools, allowing students to take courses there during the school day under the supervision of a “facilitator” who would be present in the lab. It would also add a remote classroom to each high school, where students in undersubscribed courses could participate in classes taught at one of the other schools via an interactive monitor, and expand the school’s collaboration with the University of New Hampshire at Manchester.

Online learning for high school students is on the rise.

Nearly 620,000 students took an online course during the 2011-2012 school year, up 16 percent from the previous year, according to an annual reportreleased this week by the Evergreen Education Group, which works with schools to implement online and blended learning programs.

A number of states and districts actually require students to take online classes as a condition of graduation.  One rationale is that this requirement helps prepare students for a future where online learning will be a standard part of higher education and employment.  While it appears inevitable that online education will move forward at all levels of education, conclusive evidence of how it’s working remains elusive.

At this point in the maturation of virtual education, the importance of high-quality, objective research is greater than ever. Education leaders need it to make informed decisions about how to use virtual education programs. But therein lies the problem: Very little high-quality, objective research on the subject is available.

K-12 online learning is a done deal.  As a practical matter, schools have “moved past” questioning whether it is better for students.

“Researchers and practitioners have moved past the question of ‘we need more research into whether this works,’ but I’m not sure the policymakers and legislators and the general media have,” he says.

What now needs answering, Watson says, are questions on how best to implement online learning and to determine which factors contribute to success. But that type of investigation can pose problems. With so many variations on how online learning is implemented—in hybrid forms, full-time virtual schools, supplemental online courses, courses with online instructors and without, and varying degrees of face-to-face support—it’s hard to do comparisons, Watson says.

“When you talk about research, people have an idea that you have a group of students with an online class, a control group, a random sample. …You really can’t do that” with online learning, he says. “There are far too many permutations, implementations, and instructional models.”

In my neighborhood
With continuing budget pressures arising from steeply rising pension costs, I predict online learning will soon be introduced in our local schools.  In a nearby district, low-income high schools will soon get access to ‘online and blended” AP courses.

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December 20, 2012

Income Based Repayment (IBR) is a ‘moral hazard’ for high-income student loan borrowers

by Grace

The new and improved Income Based Repayment (IBR) plan that went into effect last month is expected to benefit higher-income borrowers the most while offering only marginal assistance to low-income borrowers.

…  the New America Foundation, a nonprofit and nonpartisan policy institute, says the changes ultimately will provide only marginal help for low-income borrowers who are at the greatest risk of default.

Rather, the changes would provide big benefits to middle- and high-income borrowers, particularly for those seeking a graduate degree, the authors found. The report says that at least one financial planning company is telling law school students that the changes could allow them to write off $100,000 in student debt.

Changes to produce more generous IBR provisions were expedited by the Obama administration to take effect two years earlier than originally planned.

At least one financial planning firm, the Advantage Group, is capitalizing on the IBR features by advising clients on how they can avoid paying back portions of their student loans.

“Stop wasting your money on student loan payments,” says the Advantage Group Web site. The firm notes that an average graduate from California Western School of Law owes more than $145,000 in student loans, amounting to monthly payments of more than $1,690.

But the changes introduced by the Obama administration could allow a graduate making $70,000 a year to reduce monthly payments to $448 a month and “have over $100,000 of debt forgiven,” the Advantage Group says.

Terry DeMuth, chairman of the Advantage Group, said the firm was simply trying to help its clients benefit from the program.

A “huge giveaway” for high-income borrowers

The New America Foundation report recommends that the administration make changes that would focus the benefits of income-based repayment on lower-income borrowers and limit those for borrowers earning big incomes.

“If you are low-income, it doesn’t really give you a big bang,” said Jason Delisle, one of the authors of the study, which estimates that monthly payments for low-income borrowers would drop to $20, from $25, under the changes. “If you are high-income and have a lot of debt, this is a huge giveaway.”

Mark Kantrowitz, founder of finaid.org, a Web site about college finances, disputed the way the New America Foundation calculated some of its numbers. Nonetheless, he said he agreed with the premise.

“The design of the plan has the potential to misdirect some of the subsidies towards people who will be earning fairly substantial incomes,” he said. “The improvements don’t benefit the low-income students as much as the high-income students.”

A “moral hazard”?

JASON DELISLE, DIR., FED. EDUCATION BUDGET PROJECT, NEW AMERICA  FOUNDATION:  You’ve got a moral hazard.  You’ve got an incentive to borrow away knowing that you’re not going to have to pay it back.

SYLVIA HALL, NIGHTLY BUSINESS REPORT CORRESPONDENT: Here’s how it can be a problem—graduate students can borrow an unlimited amount of money to pay for school.  They start their careers with small or moderate salaries, making monthly payments of 10 percent of their income.  But remember, grad students often become very high earners, like doctors and lawyers.  As their salaries increase, the monthly payments on the student loans are capped based on the borrower’s debt at graduation.  That means when the debt is forgiven, there could be a whole lot left.

—————————————————-

How Much Student Loan Forgiveness Would Senator Rubio Qualify for Under New IBR Repayment Plan?

Senator Marco Rubio (R-FL) just announced that he paid off his student loans early with the proceeds from a book deal. Paying down debt ahead of schedule is generally a prudent financial move. But if the Obama administration’s new Income-Based Repayment (IBR) plan had been in place when Senator Rubio graduated from law school, his decision to pay down debt early would have been a sucker bet….

We estimate that if the New IBR plan were available back in 1996 when Senator Rubio started repaying his student loans, he would have $83,482 forgiven in the year 2015….

Don’t forget that forgiven student debt is taxable income, at least for now.

December 19, 2012

Quick Links – gift registry for college tuition; School of One; focus on short term for your career

by Grace

»»»  Have you heard about GiveCollege or Instagrad?  They’re like wedding registries for college tuition.

The Instagrad fees look high, about 8-9% of contribution amounts, while GiveCollege fees range from about 4-6% depending on the gift amount.

GiveCollege lists occasions where you can invite “friends and family to contribute to your 529 college savings plan instead of buying a traditional gift”.

  • Baby showers
  • Christenings
  • Communions
  • Bar or bat mitzvahs
  • Birthdays
  • Holidays
  • Graduations


»»»  
School of One offers personalized math instruction that could increase classroom productivity

In elementary school, John Perez was left in the dust if he hadn’t mastered a concept by the teacher’s second or third explanation. The whole class would move onto something else.

Now in sixth grade at Middle School 88 in Brooklyn, John doesn’t feel that way any longer. A computer algorithm tracks his progress through daily quizzes and adjusts his schedule based on which skills he’s mastered. Each day, he is grouped with students learning at his skill level.

“You’re always learning at your own pace,” said John, 11 years old. “You’re never behind.”

John’s school is one of four in the city to adopt this year a highly touted program known as School of One, which offers the type of personalization that officials see as the future of the nation’s largest school system. Five city public schools now use the program, which has been launched under a different name in Washington, D.C., and Chicago.

So far the mixed results from the School of One pilot program in New York City could be attributed to any number of factors, including significant staff turnover at one school.

A more efficient way to handle formative assessment
Having been told some teachers have no time to perform formative assessments that would help diagnose and address individual learning issues among their students, I see School of One as a possible solution to that problem.  This would seem to help dispel the argument that schools cannot significantly increase productivity.  One problem is that innovations to increase productivity are often politically controversial.


»»»  Indian entrepreneur advises young people to ‘pick a career that excites you at the moment’

Unlike the typical middle-aged manager in the US, “Indians long ago accepted jumping from one role to another in shorter time frames”.  Entrepeneur Rajendra Singh Pawar’s advice to young Indians that they should focus on the short term makes sense, given the nature of today’s ever-changing workplace.

The good news is that youngsters these days are very footloose. They can move from event management to software development to marketing. You get in but you don’t stay there. This is a marked difference not just in India from before but from the whole world.

Today I am more inclined to tell you to pick the career which excites you at the moment. An underlying change is happening in India. While BPO [business process outsourcing, such as call centers and medical transcription] will continue to grow, there are areas that are small now but with high growth percentages.

Pawar points out that a willingness to be flexible and mobile makes it easier for India to “build a transient work force”.  That appears to be our future – a “transient workforce”.

December 18, 2012

Forgiven student debt can come with a catch – big tax liablity

by Grace

The relief that comes with having student debt forgiven under the federal Income-Based Repayment Plan (IBR) may turn to distress when the tax consequences become apparent.

The catch comes with the forgiveness, since you generally have to pay income taxes on any forgiven debt (unless you were in a program for teachers or worked in a public service job, in which case the taxes go away). For many people, especially those who finished graduate or professional school with six figures of debt, the tax bill could be well into the five figures. And when it comes, you are supposed to pay in full, immediately.

It’s difficult to predict how many borrowers will be affected, with millions of students potentially qualifying for reduced payments under the IBR program according to various sources.  One estimate by the Office of Management and Budget has several hundred thousand borrowers incurring an average federal tax bill of $10,000.

… The O.M.B. assumed that 400,000 borrowers from 2012 through 2021, each with a beginning average loan balance of about $39,500, would each eventually receive loan forgiveness of about $41,000. Yes, you read that right. The forgiven debt will be more than the original balance, albeit many years later.

At $41,000 of loan forgiveness, the federal tax bill could easily be over $10,000 depending on your tax bracket. There are also state income taxes to contend with, depending on where you live.

In some cases the forgiven amount could be much higher, as in the example of Stephanie Day.  Day foresees a tax bill on more than $100,000, the amount she expects will be forgiven after unsuccessful attempts to secure employment in her field after receiving a master’s degree in psychology.

Should these tax liabilities also be forgiven?

 … “Think about it practically,” he said. “You forgive someone’s loans, then you stick them with a tax bill that’s equivalent to making three or five or 10 more years of payment on the loan.”Representative Sander M. Levin, Democrat of Michigan, has tried and plans to continue to try to get a law passed that will take away the tax burden, according to his spokesman. The odds of this happening anytime soon, however, are probably pretty low in the current political environment.

It might not seem fair that someone currently earning six-figures would receive a $200,000+ windfall from other taxpayers.

“Let’s say your debt has grown to $180,000 over 20 years, and by that point, you’re making $120,000,” he said. “If $180,000 is being forgiven, then you’re looking at paying taxes on $300,000 in total income in one year. At that point, you’re over the $250,000 income category, my friend.”

A program that forgives student loans and related tax liabilities seems ripe for opportunities to game the system.  Tax professionals are very familiar with schemes of timing income to take advantage of government loopholes.   And there’s at least one enterprising group already hoping to profit by “helping those burdened by student debt become aware of their repayment options” and aiding young professionals in “utilizing government programs”.

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