Utica/Rome Student Loan Debt May Be Forgiven, and Tax Free
It's no secret by now that President Biden is on a mission for some kind of student loan forgiveness. With the current COVID-19 relief bill that's on the table, it may be easier to get it done.
According to CNBC, there's a provision in the bill would make any student loan forgiveness passed from 2021-2025 tax-free. Forgiven debt is normally considered taxable income. If that forgiveness became tax-free, $10,000 in cancellation would save the average borrower around $2,000 in taxes.
“This will pave the way for President Biden to provide real relief to student borrowers without fearing they’ll receive a huge tax bill they cannot afford,” Ashley Harrington, federal advocacy director at the Center for Responsible Lending, said in a statement over the weekend.
Biden says he’s in support of $10,000 in student loan forgiveness, but he’s under mounting pressure from members of his own party, advocates and borrowers to go further and cancel $50,000 per borrower.
What Kind of Loans Are Included?
According to Axios, all federal student loans are eligible, including state education loans, institutional loans, private student loans and private parent loans.
Many in Utica/Rome are backing the forgiveness, but many have their criticism as well.
They say it will fail to stimulate the economy because college graduates tend to be higher earners who will put their monthly payments into savings and not spend more. They also think it's an opportunity for Americans to think they don't have to repay their debts, and that it's unfair for those who worked so hard to pay their debt back already.
CNBC says that student loan borrowers were already in crisis before the COVID-19 pandemic - with a third of borrowers in delinquency or default - and that the pain has only worsened after a year of record high unemployment.
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