Friday, December 9, 2022
Hawai'i Free Press

Current Articles | Archives

Sunday, December 13, 2015
An Early Christmas Present from IRS to Heald Students
By Tom Yamachika @ 4:01 AM :: 4140 Views :: Higher Education, Taxes

by Tom Yamachika, President, Tax Foundation Hawaii

On April 27 of this year, Heald College, a 150-year-old institution with a campus in Hawaii, abruptly shut down. The Hawaii campus was one of 28 campuses owned by Corinthian Colleges; all of them shut down on the same day, displacing about 16,000 students, about 1,000 of which were in Honolulu.

The reason for the massive shutdown was that the college’s management misrepresented job placement rates to current and prospective students as well as accreditation teams. As Larry Barton, a former president of Heald College, put it:

Now, students who knew a respected name, Heald College, were often not aware that at Corinthian, profit sometimes trumped rigor in the classroom. Like numerous other for-profit institutions around the country, literally thousands of complaints were filed by the students with the feds about a failure to educate. Students often owed $40,000 or more in college loans – holding a degree they claimed was inadequate at best.

The decision last week by the Obama administration to essentially strip Corinthian of its ability to access federal funds is prudent, overdue and incredibly important. It is a signal to other for-profit and even not-for-profit institutions that a promise made – a degree that should lead to tangible employment – requires a hefty curriculum, high impact faculty and robust placement so that students can become gainfully employed and then repay their loans.

The aftermath, of course, was that there were thousands of students tossed out onto the streets – some with mere weeks remaining before they were supposed to graduate. Many of these students had to borrow substantial sums to pay for tuition and fees, and then were faced with the prospect of needing to go to another educational institution; having that institution determine how many credits, if any, could be transferred; and possibly having to borrow more money to pay the next educational institution while still needing to repay student loans for going to Heald.

Fortunately, the federal government offered a way out of this bind. Under some circumstances, student loans can be “discharged,” meaning the debt is forgiven and the student doesn’t owe anything on the student loan debt any more. Many of the Heald students with federal student loans took advantage of this program.

The story, however, does not end there. Generally, if you owe money and your creditor forgives the debt, you have income for tax purposes. The amount of income is the amount of debt forgiven. So the good news is that you don’t owe your creditor any more, and the bad news is that you generally will owe the tax authorities.

On December 3rd, the IRS announced that it issued Rev. Proc. 2015-57. Cutting through the technical language in it, the IRS is essentially saying, “Look. There may be some instances when these students realize taxable income, but there are lots of instances where they won’t. The same goes for federal education credits, which in a perfect world might need to be recaptured in some instances. It’s too much of a burden for them and for us to make them prove and have us verify that they don’t owe tax. So we will be perfectly happy if they don’t report anything having to do with the discharge of the Corinthian-related student loans, and we will use our time to do better things like catching real crooks.”

Merry Christmas, former Heald students. This is called “administrative discretion” and in our view it’s a perfectly logical and justifiable use of it.

Links

TEXT "follow HawaiiFreePress" to 40404

Register to Vote

2aHawaii

808 Silent Majority

ACA Signups Hawaii

Alliance Defending Freedom

Aloha Pregnancy Care Center

American Council of Trustees and Alumni

AntiPlanner

Antonio Gramsci Reading List

A Place for Women in Waipio

Astronomy Hawaii

Back da Blue Hawaii

Ballotpedia Hawaii

Better Hawaii

Broken Trust

Build More Hawaiian Homes Working Group

ChinaTownWatch.com

Christian Homeschoolers of Hawaii

Cliff Slater's Second Opinion

DVids Hawaii

FIRE

Fix Oahu!

Frontline: The Fixers

Genetic Literacy Project

Grassroot Institute

Habele.org

Hawaii Aquarium Fish Report

Hawaii Aviation Preservation Society

Hawaii Catholic TV

Hawaii Christian Coalition

Hawaii Cigar Association

Hawaii Coalition Against Legalized Gambling

Hawaii ConCon Info

Hawaii Credit Union Watch

Hawaii Crop Improvement Association

Hawaii Debt Clock

Hawaii Defense Foundation

Hawaii Family Forum

Hawaii Farmers and Ranchers United

Hawaii Farmer's Daughter

Hawaii Federalist Society

Hawaii Federation of Republican Women

Hawaii Future Project

Hawaii Gathering of Eagles

Hawaii History Blog

Hawaii Homeschool Association

Hawaii Jihadi Trial

Hawaii Legal News

Hawaii Legal Short-Term Rental Alliance

Hawaii Matters

Hawaii's Partnership for Appropriate & Compassionate Care

Hawaii Public Charter School Network

Hawaii Rifle Association

Hawaii Shippers Council

Hawaii Smokers Alliance

Hawaii State Data Lab

Hawaii Together

HIEC.Coop

HiFiCo

Hiram Fong Papers

Homeschool Legal Defense Hawaii

Honolulu Navy League

Honolulu Traffic

House Minority Blog

Imua TMT

Inouye-Kwock, NYT 1992

Inside the Nature Conservancy

Inverse Condemnation

Investigative Project on Terrorism

July 4 in Hawaii

Kakaako Cares

Keep Hawaii's Heroes

Land and Power in Hawaii

Legislative Committee Analysis Tool

Lessons in Firearm Education

Lingle Years

Malulani Foundation

Managed Care Matters -- Hawaii

Malama Pregnancy Center of Maui

MentalIllnessPolicy.org

Military Home Educators' Network Oahu

Missile Defense Advocacy

MIS Veterans Hawaii

NAMI Hawaii

Natatorium.org

National Christian Foundation Hawaii

National Parents Org Hawaii

NFIB Hawaii News

No GMO Means No Aloha

Not Dead Yet, Hawaii

NRA-ILA Hawaii

Oahu Alternative Transport

Obookiah

OHA Lies

Opt Out Today

OurFutureHawaii.com

Patients Rights Council Hawaii

PEACE Hawaii

People vs Machine

Pritchett Cartoons

Pro-GMO Hawaii

P.U.E.O.

RailRipoff.com

Rental by Owner Awareness Assn

ReRoute the Rail

Research Institute for Hawaii USA

Rick Hamada Show

RJ Rummel

Robotics Organizing Committee

Save Dillingham Airfield

School Choice in Hawaii

SenatorFong.com

Sink the Jones Act

Statehood for Guam

Talking Tax

Tax Foundation of Hawaii

The Real Hanabusa

Time Out Honolulu

Trustee Akina KWO Columns

UCC Truths

US Tax Foundation Hawaii Info

VAREP Honolulu

Waagey.org

West Maui Taxpayers Association

What Natalie Thinks

Whole Life Hawaii

Yes2TMT