For 2023 tax filings, student loan borrowers may deduct up to $2,500 in interest paid due to the resumption of payments. Despite the blockage of sweeping student loan forgiveness, some borrowers have received relief. Notably, forgiven debt remains non-taxable federally until 2025, but state taxes may apply. Additionally, the Education Department is providing refunds for payments made on loans that were later forgiven, which are not taxable.
President Biden's State of the Union address emphasized the government's efforts to ease student debt burdens through Income-driven Repayment Plans and Public Service Loan Forgiveness. The Income-driven Repayment Plans have granted forgiveness to 930,000 borrowers, while Public Service Loan Forgiveness, now expanded, has benefited 790,000 public servants, resulting in a total of $138 billion in debt relief for nearly 4 million borrowers.
