Privacy Policy

If you have the opportunity to pay off your student loan debt, congratulations. It’s a great relief, and another step toward achieving more financial freedom. The process can take years — even decades.

Now, let’s talk about graduates that are enrolled in an income-driven repayment plan. Did you know that their student loan debt may be forgiven after 20 or 25 years? If it sounds too good to be true, you’re right. Loan forgiveness recipients are now hearing more about tax bombs. After loan forgiveness, college graduates are being notified that they now owe more money — to the IRS. They must pay taxes on the amount that was forgiven.

Tax bombs are most common among people with income-driven repayment plans. It can be a big surprise and another financial burden if you are unprepared to make the payment. There is also a chance that your tax bill will be due immediately.

Understanding income-driven repayment plans

If you are enrolled in an income-driven repayment plan, take notes. These plans were designed to last about 20 to 25 years, planning for a payoff by the end of this term. If a balance remains, the remaining cost is forgiven. However, the forgiven amount is now taxed as income.

Avoiding a tax bomb

If your loans are forgiven while enrolled in a different federal student loan program, the remaining balance will most likely be tax-exempt. This means you won’t have to deal with a tax bomb. There are also other scenarios for exemption:

  • Goodbye, Perkins loans
    If you qualified for having your Perkins loan canceled, you can rest easy about a tax bomb. Eligibility includes working or volunteering in a way that meets the criteria for cancellation.
  • You have a different reason for cancellation
    If you were enrolled at a school but defrauded by them, your loans can be resolved without the worry of a tax bomb. Another example is if your school closed while you were enrolled.
  • Someone dies or has a permanent disability
    In the unfortunate event of death or someone becoming permanently disabled, the estate will not be taxed.

Various states offer forgiveness programs. However, it’s best to do your research before assuming that you will be tax-free after loan forgiveness.

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Calculating the costs

If you are anticipating a tax bomb, consider these two things: the amount of your loan that will be forgiven and your current financial situation. Keep in mind that a forgiven student loan may also push you into a higher tax bracket; it is additional taxable income. This could bring an even larger tax headache.

Loan forgiveness can also affect your state taxes. It’s always best to check with a tax professional. While doing your research, you will learn that some states don’t have income taxes. Some states also don’t tax forgiven student loan amounts that occurred during the income-driven repayment plan.

Planning for the tax bomb

If you don’t think you will be able to pay off your income-driven payment plan within 20-25 years, start saving. You may have to deal with a tax bomb. Here are two tips:

⦁ Estimate your bill
Did you know that there is a repayment estimator? Visit studentaid.gov to learn more. While tax brackets can change, it is still helpful to begin with a plan. Using the resources from the Bureau of Labor Statistics, gain more insight into your earning potential. Then, you can see how much you may owe.

⦁ Save, save, save
If you know that you will not be able to pay off your loan within the allotted time, it is best to not pay extra on your monthly payments. Instead, set it aside for a potential tax bomb. You can start with $50 each month. You will be amazed at how a small amount grows over time.

Paying for the tax bomb

If the tax bomb payment is too high or unmanageable, there are options. For many people, this large amount of money is not sitting in their bank accounts. Consider all of the other financial goals such as buying a home or saving for retirement.

How should you respond? Learn more about the payment plan agreement through the IRS. Keep in mind that these plans charge fees and interest. Interest rates change every quarter. Depending on the situation, the IRS may also recognize that your liabilities are greater than your assets. This means that you may have a difficult time paying the amount. The IRS may either exclude some of your forgiven balance from your income — or, even better, the full amount.

If you are enrolled in an income-driven repayment plan, start asking questions early. Get connected with a tax professional to see if you will need to prepare for a tax bomb. Knowing where you stand with your loan forgiveness options is the first step to success.

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This privacy policy has been compiled to better serve those who are concerned with how their 'Personally Identifiable Information' (PII) is being used online. PII, as described in US privacy law and information security, is information that can be used on its own or with other information to identify, contact, or locate a single person, or to identify an individual in context. Please read our privacy policy carefully to get a clear understanding of how we collect, use, protect or otherwise handle your Personally Identifiable Information in accordance with our website.

What personal information do we collect from the people that visit our blog, website or app?

When ordering or registering on our site, as appropriate, you may be asked to enter your name, email address or other details to help you with your experience.

When do we collect information?

We collect information from you when you subscribe to a newsletter, fill out a form or enter information on our site.

How do we use your information?

We may use the information we collect from you when you register, make a purchase, sign up for our newsletter, respond to a survey or marketing communication, surf the website, or use certain other site features in the following ways:

  • To administer a contest, promotion, survey or other site feature.
  • To ask for ratings and reviews of services or products

How do we protect your information?

We do not use vulnerability scanning and/or scanning to PCI standards.

An external PCI compliant payment gateway handles all CC transactions.

We do not use Malware Scanning.

We do not use an SSL certificate

  • We do not need an SSL because:

Do we use 'cookies'?

Yes. Cookies are small files that a site or its service provider transfers to your computer's hard drive through your Web browser (if you allow) that enables the site's or service provider's systems to recognize your browser and capture and remember certain information. For instance, we use cookies to help us remember and process the items in your shopping cart. They are also used to help us understand your preferences based on previous or current site activity, which enables us to provide you with improved services. We also use cookies to help us compile aggregate data about site traffic and site interaction so that we can offer better site experiences and tools in the future.

We use cookies to:

  • Keep track of advertisements.
  • Compile aggregate data about site traffic and site interactions in order to offer better site experiences and tools in the future. We may also use trusted third-party services that track this information on our behalf.

You can choose to have your computer warn you each time a cookie is being sent, or you can choose to turn off all cookies. You do this through your browser settings. Since browser is a little different, look at your browser's Help Menu to learn the correct way to modify your cookies.

If users disable cookies in their browser:

If you turn cookies off, Some of the features that make your site experience more efficient may not function properly.Some of the features that make your site experience more efficient and may not function properly.

Third-party disclosure

We do not sell, trade, or otherwise transfer to outside parties your Personally Identifiable Information unless we provide users with advance notice. This does not include website hosting partners and other parties who assist us in operating our website, conducting our business, or serving our users, so long as those parties agree to keep this information confidential. We may also release information when it's release is appropriate to comply with the law, enforce our site policies, or protect ours or others' rights, property or safety.

However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.

Third-party links

Occasionally, at our discretion, we may include or offer third-party products or services on our website. These third-party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.

Google

Google's advertising requirements can be summed up by Google's Advertising Principles. They are put in place to provide a positive experience for users. https://support.google.com/adwordspolicy/answer/1316548?hl=en

We have not enabled Google AdSense on our site but we may do so in the future.

California Online Privacy Protection Act

CalOPPA is the first state law in the nation to require commercial websites and online services to post a privacy policy. The law's reach stretches well beyond California to require any person or company in the United States (and conceivably the world) that operates websites collecting Personally Identifiable Information from California consumers to post a conspicuous privacy policy on its website stating exactly the information being collected and those individuals or companies with whom it is being shared. - See more at: http://consumercal.org/california-online-privacy-protection-act-caloppa/#sthash.0FdRbT51.dpuf

According to CalOPPA, we agree to the following:

Users can visit our site anonymously.

Once this privacy policy is created, we will add a link to it on our home page or as a minimum, on the first significant page after entering our website.

Our Privacy Policy link includes the word 'Privacy' and can easily be found on the page specified above.

You will be notified of any Privacy Policy changes:

  • On our Privacy Policy Page

Can change your personal information:

  • By emailing us

How does our site handle Do Not Track signals?

We honor Do Not Track signals and Do Not Track, plant cookies, or use advertising when a Do Not Track (DNT) browser mechanism is in place.

Does our site allow third-party behavioral tracking?

It's also important to note that we allow third-party behavioral tracking

COPPA (Children Online Privacy Protection Act)

When it comes to the collection of personal information from children under the age of 13 years old, the Children's Online Privacy Protection Act (COPPA) puts parents in control. The Federal Trade Commission, United States' consumer protection agency, enforces the COPPA Rule, which spells out what operators of websites and online services must do to protect children's privacy and safety online.

We do not specifically market to children under the age of 13 years old.

Do we let third-parties, including ad networks or plug-ins collect PII from children under 13?

Fair Information Practices

The Fair Information Practices Principles form the backbone of privacy law in the United States and the concepts they include have played a significant role in the development of data protection laws around the globe. Understanding the Fair Information Practice Principles and how they should be implemented is critical to comply with the various privacy laws that protect personal information.

In order to be in line with Fair Information Practices we will take the following responsive action, should a data breach occur:

We will notify you via email

  • Within 7 business days

We also agree to the Individual Redress Principle which requires that individuals have the right to legally pursue enforceable rights against data collectors and processors who fail to adhere to the law. This principle requires not only that individuals have enforceable rights against data users, but also that individuals have recourse to courts or government agencies to investigate and/or prosecute non-compliance by data processors.