COVID Relief Bill Allows Student Debt Cancellation Without Tax Impact
WASHINGTON DC (Nexstar Media Wire) – The COVID relief bill passing through Congress will make it easier for President Biden to write off some student loan debt, his supporters say.
A provision in the bill would exempt from tax any forgiveness of student loans adopted between 2021 and 2025. The debt forgiven is normally considered taxable income. If that rebate became tax-exempt, a $ 10,000 write-off would save the average borrower about $ 2,000 in taxes, according to CNBC.
“This will pave the way for President Biden to bring real relief to student borrowers without the fear of receiving a huge tax bill that they cannot afford,” Ashley harrington, federal director of advocacy at the Center for Responsible Lending, said in a statement over the weekend.
All federal student loans are eligible, including public education loans, institutional loans, private student loans, and private parental loans, according to Axios.
The provision had been pushed by Senators Elizabeth Warren and Bob Menendez.
The House is expected to approve the provision allowing President Biden to sign it soon. The government will lose some $ 44 million in revenue as a result of the provision, reports The Wall Street Journal.