Student Load Negotiations

[Buehler445]

Originally Posted by Amnorix

Sounds like a good plan, except, possibly, for paying down the home mortgage faster. Depending on the rate, that may not be a terribly exciting thing to do. Once you factor in the tax deduction (assuming you're not capped by SALT), the effective cost of a home mortgage at prevailing rates is very low.

I'd be maxing out 401(k) deductions, IRA deductions, etc., before I'd be worrying about paying down the mortgage faster.

The Standard Deduction is now 24,000 for MFJ. It’s unlikely, not impossible though, that mortgage interest will make a material impact on his tax liability.

Originally Posted by luv

I know, with credit cards, you want to maintain some percentage of debt being used as long as it stays under 30% of your total available credit. However, federal student loans are a whole other ball of wax. As someone else stated, they are not subject to discharge under bankruptcy, so there's probably little reason for them to want to lessen the amount you owe them significantly, because they'll lose all of the collectible interest. For this reason, defaulting on these loans is not worth it because it will do nothing but damage your credit rating.



If you settle for less than you owe, you will receive a 1099 for the amount that was forgiven that you must claim as income. I'm not a tax expert, but I know this from past experience.

It depends on how they structure it. Renegotiation does not necessarily equate to debt forgiveness.