Sara Stathas | Bloomberg | Getty ImagesHow student loan forgiveness used to be taxedBefore that Covid-era change, any student loan debt canceled by the government was considered taxable and levied at the borrower's normal income tax rate.
The federal tax bill could be hefty.
watch now'Replacing education debt with tax debt'Many student loan borrowers who get forgiveness aren't able to afford a tax bill, Kantrowitz said.
If borrowers sign up for a payment plan with the IRS, they're merely "replacing education debt with tax debt," Kantrowitz said.
Other student debt forgiveness plans, including a popular one for public servants and another that cancels the debt for those with serious disabilities, are already nontaxable.
Persons:
Joe Biden, Sara Stathas, Mark Kantrowitz, Kantrowitz, aren't, they're
Organizations:
Hillside Boys, Girls Club, Bloomberg, Getty
Locations:
Milwaukee , Wisconsin