Wolters Kluwer expert examines threats to Biden’s student loan forgiveness program and analyzes potential state income tax for borrowers
A senior legal analyst examines recent developments as Biden’s student loan forgiveness program begins to take shape
NEW YORK, November 4, 2022 /PRNewswire/ —
What: Seven states can mandate student loan forgiveness under Biden administration’s program
Why: During his 2020 campaign, President Biden touted promises to cancel student loans, and on August 24, his administration announced that the request for debt relief would arrive soon. Although the app was officially released on October 17, the program itself is currently “on hold,” with no debts available for cancellation until federal appeals courts, and potentially the Supreme Court, resolve ongoing challenges to the program. While the American Rescue Plan Act of 2021 (ARPA) ensures that this forgiveness of debt is not subject to federal income tax, some states still seek to impose income taxes.
In its new strategic perspective titled “The fate of the student loan forgiveness program is unclear, but the state tax consequences for borrowers are taking shape“, Wolters Kluwer Legal & Regulatory US Legal Analyst Senior Anne H. Gibson offers an in-depth overview of the program by analyzing eligibility, legal objection, how it differs from other debt cancellation initiatives, and how state income tax will affect it. Additionally, Gibson provides a detailed map and chart detailing the rapidly developing debt relief program. The map highlights states that will tax canceled student debt, states that will not, and states that may. The table breaks down each state’s compliance with the IRC’s definition of income along with the relevant code sections.
Who: Anne H. Gibson, JD, LL.M.
The student loan forgiveness program will certainly be a boon for many borrowers, but the one-time debt relief could lead to an additional tax burden for those who live in states that have chosen to tax it. Some opponents of the program have even based their legal challenges on this possible state taxation. – Anne H. GibsonJD, LL.M. Senior Legal Analyst
To read the full policy perspective, visit: Student Loan Forgiveness Program Fate Unclear, But State Income Tax Implications for Borrowers Are Shaping
Contact: To arrange an interview with Anne H. Gibson or other Wolters Kluwer Legal & Regulatory US legal experts on this or any other legal topic, please contact Linda Gharib: [email protected]
About Wolters Kluwer Legal and Regulatory United States
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