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Tax Tip of the Week | No. 273 | Congressional Bill Could Help Married Couples Deduct More Interest on Student Loan Debt October 22, 2014

Posted by bradstreetblogger in : General, Tax Preparation, Tax Tip, Taxes, Taxes , trackback

Tax Tip of the Week | Oct 22, 2014 | No. 273 | Congressional Bill Could Help Married Couples Deduct More Interest on Student Loan Debt

Rep. Mark Pocan, D-Wis., has introduced a bill that would help low-income married couples deduct twice as much of the interest charged on their student loan debts.

Pocan recently introduced the Student Loan Interest Deduction Fairness Act, which would help low-income households who have made payments on their loans access greater equity in receiving the Student Loan Interest Deduction currently available to borrowers.

Under the Tax Code, individuals are able to receive up to a $2,500 tax deduction for interest paid on student loans, but when a couple is married and files jointly, the couple can only receive a maximum of $2,500. The Student Loan Interest Deduction Fairness Act, H.R. 5508, would allow married couples to access up to the full $5,000 benefit, which would have been available to individuals prior to marriage.

Currently, the average student graduates with around $29,400 in loans, Pocan’s office noted, and 58 percent of all student debt is held by families in the bottom 25 percent of household incomes. Nationally, student debt tops $1.2 trillion.

“Student loan debt is disproportionally affecting low-income households—burdening them with financial adversity and weighing down our economy,” Pocan said in a statement. “This bill will fix an inequity in our tax code and help these families, which hold 58 percent of all student debt, pay off their crushing levels of student loan debt.”

The bill is supported by the American Council on Education, the Association of Public-Land Grant Universities, Equal Justice Works and One Wisconsin.

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