Student loan forgiveness could hike tax bill for borrowers, study finds
Summary
A new study finds that people who get student loan forgiveness through income-driven repayment plans might face much higher tax bills starting in 2026. This change happens because the current rule that stops forgiven student loans from being taxed will end after 2025.Key Facts
- Student loans forgiven under income-driven repayment (IDR) plans were not taxed before 2026.
- The tax exemption for forgiven loans will expire at the end of 2025.
- After 2025, forgiven student loan amounts may be treated as taxable income.
- The study shows that tax bills for borrowers could triple due to this change.
- A typical married couple with two kids earning about $60,000 could see their taxes increase.
- This change affects people who use income-driven repayment plans to manage student loans.
- The exact tax impact depends on individual income and family size.
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