Do Student Loans Count As Income? Check Out Here

Do Student Loans Count As Income?

Most if not all students, resume school with the hope that things would just go smoothly and without stress for them which is just what is necessary for a maximum focus on school work.

Gradually, things begin to get bad financially, the income begins to depreciate__of course you how important it is to have just enough cash to take care of necessary things in school as a student.

Do Student Loans Count As Income_.png

When things get from bad to worse, most people do not wait for it to get worst; they resort to taking loans so as to help themselves move on with school work.

Others get the loan enough to see them through school even before enrollment and resumption making sure that they have acquired just enough to see them through (although most times, it turns out not be enough).

Channels through which students could possibly acquire their financing include; scholarships and fellowships, federal student loans, from unsubsidized to subsidized loans, to Direct Consolidation Loans and Direct PLUS loans, etc.

Are Grants And Scholarships Regarded As Income?

The IRS has strict and precise rules which regard what grants and scholarships should be considered as or not considered as touching financial aids loans.

Good news! You do not have to pay taxes on your grant or scholarship if you:

  1. Used the grant you acquired to pay for education expenses at an eligible institution
  2. Are currently enrolled.

Is Student Loans Forgivable?

Wondering if students loan are forgivable? Of courseYes! it is forgivable but, must meet the criteria your lender must have put in place before granting you the loan.

Loans are not totally forgiven, the lender would only decide on what amount to get back on returns which is usually lower than what was borrowed.

Note that when some part of loans have been forgiven, the borrower will have to still pay taxes on the amount forgiven since the forgiven amount is considered a Taxable Income.

Do Student Loans Count As Income?

One important thing about income is that it attracts tax payment. From whatever source the income is coming from, you are obliged to make due payment of every income.

The question now is do student loans count as income? No! the reason is because the IRS does not see to be incomes since the loans must be repaid.

Student loans are NOT money one acquires to keep. In other words, they’re technically NOT “income”, and as such, not taxable. Although they’re a part of your total FAFSA award.

Conclusion

So the IRS does not regard student loans as a repayable income. Students usually do not keep their student’s loan. So it is wrong for it to be referred to as income.

But things can get a bit dicey when your loans are forgiven or you receive grants (For example, Marshall Scholarships or Rhodes Scholarships) or Grants (for example, Federal Supplemental Educational Opportunity Grant (FSEOG), Academic Competitiveness Grant, SMART Grant).

Though, the IRS student loans do not place student loans in the category of income that can be taxed. Financial aid loans have a lot of tax and credit consequences.

 

 

Kindly leave a comment below and share