The final version of H.R. 1, tax reform legislation, preserves the student loan interest tax deduction, which was targeted for elimination in the earlier House-passed version of the bill.
In a Nov. 28 letter to the leadership of the House Ways and Means Committee and the Senate Finance Committee, the ABA expressed support, based on policy adopted in 1992, for the student loan interest tax deduction and said that law students are directly affected by any changes in the deduction.
Current rules allow borrowers to deduct, subject to income limits, up to $2,500 in interest paid toward federal and private student loans that qualify.
“Of particular interest to the American Bar Association is the powerful financial disincentive for law students to enter the important function of public service in our society,” wrote ABA Governmental Affairs Director Thomas M. Susman. “The deduction of interest on law school loans helps recent graduates to accept lower paying, public service jobs that they might not otherwise be able to afford,” he emphasized.
Susman said the rising costs of obtaining college and graduate education result in a widening of the chasm between rich and poor, and college education may soon become a luxury that only the wealthy can afford.
The tax reform bill, marking the first major overhaul of the tax system since 1986, was expected to be passed by the House and Senate and signed by the president before Christmas.