WASHINGTON (NEXSTAR) – The COVID relief bill working its way through congress will make it easier for President Biden to forgive some student loan debt, proponents say.
A provision in the bill would make any student loan forgiveness passed from 2021-2025 tax-free. Forgiven debt is normally considered taxable income. If that forgiveness became tax-free, $10,000 in cancellation would save the average borrower around $2,000 in taxes, according to CNBC.
“This will pave the way for President Biden to provide real relief to student borrowers without fearing they’ll receive a huge tax bill they cannot afford,” Ashley Harrington, federal advocacy director at the Center for Responsible Lending, said in a statement over the weekend.
All federal student loans are eligible, including state education loans, institutional loans, private student loans and private parent loans, according to Axios.
The provision had been pushed by Senators Elizabeth Warren and Bob Menendez.
The House is expected to approve the provision soon for President Biden to sign it into law. The government will lose some $44 million in revenue because of the provision, reports The Wall Street Journal.