Heather,

I have attended a webinar and I also got to hear you speak at SPDTC in Montgomery in January (I think it was then and there).  I am a public defender and I have received two nice grants as a result of JRJ.  Last year I claimed this grant as income (it bumped up my AGI significantly and as a result- my IBR monthly payment (I am enrolled and registered/verified as having made 23 qualifying monthly payments, 97 to go!)  significantly increased.  Was I wrong in thinking that payment of student loan debt would be income?  I have no guidance from the body disbursing the grants (South Carolina Prosecution Coordination Committee).  They tell me there is no tax form for this grant. 

What are my options for next year (similar sized grant) regarding tax liability? Is the JRJ in a gray area? I really want to minimize my monthly payments and maximize my forgiveness at the end of my 120 qualifying payments, so maybe accepting the grant is not that great an idea?  I was sort of treating it as a hedge in case I wanted to leave public interest (though I can’t imagine ever doing that).  Now I am not so sure.

Thank you for all that you are doing for students and student loan payors!

Shane Goranson

You are most welcome and thank you for the important work you do!

The tax thing is in flux, yes.  Initially, it was thought that JRJ grants would be taxable, and the Dept of Justice said so.  Then the Dept of Ed got an opinion from IRS that a similar program for civil legal aid lawyers was not taxable, causing folks to reconsider on JRJ.  My understanding is that there has not yet been official word from IRS about JRJ but that DOJ has requested it.  I need to follow up with them to see where that stands.

You can check out the relevant tax considerations using the materials under Student Loan Laws on my Tools page.