Forgiving Student Debt

With the American Rescue Plan being passed to push almost 2 trillion dollars towards Covid Relief efforts, part of the money has also ensured any forgiven student debt is not taxable.

Previously, forgiven student debt was still taxed and had to be paid by the borrower. This bill marks some progress with the issue of massive student debt and has led the way for a plan to help cancel it too.

The forgiven debt will directly impact the current generation of students at Champlain by offering more affordable help with their debt as they leave the school to pursue their majors. and The road to canceling more student debt will aid the students even more in the future as well.

While the forgiven student debt may not sound like much of an improvement at first, it is a big step in providing more aid to students with their debt. Douglas Webber, an associate economics professor at Temple, said “Any debt forgiveness wouldn’t benefit borrowers if it led to an unaffordable tax bill. I see this as one step closer to eliminating what would be not just a big potential downside, but a big public relations problem.”

This step has made it so the government can now relieve students of some of their debt without also dropping huge taxes on them in the process. The legislation and the debt restructuring it provides paves the way for the government to start in its quest to eliminate student debt.

Democrats are pushing President Biden to forgive around $50,000 per person with the opportunity they had been given for progression. However, Biden is pushing back and offering $10,000 in student debt relief he had campaigned on in 2020.

While the discussion of canceling student debt is still going on today, the Covid Relief bill and nontaxable forgiveness brought the issue to the forefront, and having it as a point of contention in the government will no doubt bring progress to an issue that has plagued the US for a while now.

Sources:

COVID Tax Break Could Open Door to Student Loan Forgiveness | Personal-finance | tulsaworld.com

Warren and Schumer keep pressure on Biden to cancel student debt (yahoo.com) Student loan forgiveness is now tax-free. What that means for borrowers if Biden cancels the debt (msn.com)

By

Back to Homepage