Pascrell-Gomez-Menendez Bill To Make Student Debt Forgiveness Tax Free Enables Congress

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Pascrell-Gomez-Menendez Bill To Make Student Debt Forgiveness Tax Free Enables Congress

Major relief for student borrowers included in historic US bailout

WASHINGTON, DC – Today, legislation presented by U.S. Reps Bill Pascrell, Jr. (D-NJ-09), Jimmy Gomez (D-CA-34) and Senator Bob Menendez (D-NJ) to exempt from tax The student loan exemption was approved by the United States Congress and sent to the White House for the President’s signature Biden. This significant relief for student borrowers has been included in the US bailout, comprehensive aid and stimulus legislation passed by Democrats today to address the dual threat of the continuing pandemic and its economic fallout.

“The government exists to share the burden of everyday life and do good in the lives of Americans” said Rep. Pascrell. “For tens of millions of Americans in debt to pay for their education, the burden can be crippling. By freeing student borrowers from the burden of heavy taxes, we are now empowering millions of Americans to continue living on a cleaner slate. I thank my colleague Representative Jimmy Gomez for his leadership. So many lives can be changed for the better with our plan to make loan cancellation tax free. “

“Student loan debt is a trillion dollar industry crippling graduates of all ages and backgrounds nationwide, especially first generation students and people of color.” said Representative Gomez. “This crisis is so severe that it affects people even decades after graduation, including myself. As my colleagues and I continue to push President Biden to quash the student through executive action, my legislation will be key to ensuring that American workers are not penalized for possible government relief. With the passage of the American Rescue Plan Act which includes our tax-free student loan exemption legislation, we are moving closer to the reality of blanket student debt forgiveness for millions of Americans. .

“Millions of Americans were already drowning under a mountain of student loan debt before they were hit by the economic impact of COVID-19. And when they are lucky enough to get some relief, then the government shouldn’t tie a heavy fiscal anchor around their financial lifeline ”, Senator Menendez said. “We now have a tremendous opportunity to relieve this crippling weight and that opportunity should not be jeopardized by an arbitrary tax bill on unrecorded income. I hope this paves the way for President Biden to deliver real debt relief that many student borrowers need and give our economy a boost that benefits everyone.

Under current law, most remissions on student loans, including remissions under federal income-based repayment plans, are treated as additional taxable income. This often pushes borrowers into higher tax brackets and leaves them struggling with a crippling tax payment on their canceled loans.

The Pascrell-Gomez-Menendez bill would exclude the full or partial forgiveness of any university loan between December 31, 2020 and January 1, 2026 from a borrower’s income. This relief applies to public, private and institutional loans. For example, a family of four that earns $ 100,000 a year and whose $ 50,000 in university loans have been canceled could receive more than $ 10,000 in federal tax savings under this law.

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