This week brought more attempts by the Democrats in Congress to address the student loan debt crisis. Representatives Mark Pocan (D-Wis) and Frederica Wilson (D-Fla) introduced a bill to provide tax relief to borrowers who have consistently repaid their student loans on time. Currently, borrowers can be taxed on their forgiven student loans after 20 years of consistent repayment which, depending on their income, can push them into a higher tax bracket. According to Pocan and Wilson, there are 1.44 million people enrolled in Income Based Repayment and 190,000 enrolled in Pay as You Earn programs that are negatively affected by this tax liability. The Relief for Underwater Student Borrowers Act aims to forgive this loan balance tax free, a benefit that’s currently only available to borrowers who choose a career in public service. Pocan and Wilson believe this bill will help borrowers and their families in addition to giving the US economy a much needed boost.
We reached out to Pocan’s office about the passability of the bill and due to a limited number of session days in September, it’s possible it won’t be addressed anytime soon. A rep from Pocan’s office reminded us that “the important thing, however, is making sure that this issue is raised and that we get people thinking about this fix because it is something that could adversely impact borrowers.”
We’ll keep you posted.