- ORIGINAL NEWS
What student loan borrowers need to know this tax season
- SUMMARY
There have been several changes affecting student loan borrowers that may impact your 2023 tax filing.
One change to note is the resumption of student loan interest payments in October 2023.
This means borrowers could have interest payments to deduct for 2023, potentially reducing their tax liability.
The student loan interest deduction allows qualifying borrowers to deduct up to $2,500 in interest paid on eligible loans.
Additionally, there have been several developments related to student loan forgiveness.
While President Biden’s plan for sweeping forgiveness was blocked, almost 3.9 million borrowers have received some form of relief under his administration.
Importantly, under current law, forgiven student debt is not considered taxable income until 2025.
However, some states may impose taxes on forgiven debt, so check with your state’s tax agency for guidance.
If you made payments on loans that were later forgiven, the Education Department is issuing refunds for those payments, which are not taxable.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“The student loan interest deduction allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt.”
“Their 2023 tax bill could be a little lower.”
Negative
“Your lender or student loan servicer reports your interest payments for the tax year to the IRS on a tax form called a 1098-E, and should provide you with a copy, too.”
“If you don’t receive the form, you should be able to get it from your servicer.”