The Biden administration's student loan forgiveness plan aims to wipe out debts for millions of Americans, starting as early as this fall. This move aims to boost the Democratic presidential candidate in the upcoming 2024 election, as it resonates with young voters and contrasts with the Republican stance of opposing debt relief for students. However, the plan could face possible legal challenges, which could delay or prevent its implementation.
President Biden's plan proposes up to $20,000 in student loan forgiveness for certain groups. Loan forgiveness granted before 2026 will not result in federal tax liability. However, future forgiveness may be subject to federal taxes and potentially state taxes. Borrowers who receive forgiveness under income-driven repayment plans after 2025 may face tax consequences. It's important for borrowers to consider how tax implications could impact them.
President Biden's new plan will forgive up to $20,000 in student loans for many borrowers, including those who owe more than they originally borrowed, low-income earners, and those who have not successfully applied for other relief programs. The plan also cancels loans for borrowers whose degrees are from "low-value" institutions or who are experiencing financial hardship.
