Tax Policy – Bill Introduced to Stop Taxation of Forgiven Student Loan Debt Due to Disability or Death


Last week, Senators Chris Coons (D-DE), Angus King (I-ME), and Rob Portman (R-OH) introduced S. 2800, the Stop Taxing Death and Disability Act. The bill would end federal taxation of discharged federal student loans under the “Total and Permanent Disability” standard or in the event of the death of a borrower. Under current law, forgiven federal student loan debt is considered income for tax purposes. As a result, borrowers who have their federal student loan debt forgiven due to a qualifying disability, and families of borrowers who die, can be charged tens of thousands of dollars in taxes. The Arc supports S. 2800, which will end this unnecessary and harmful tax provision. To learn more, read remarks on the Senate floor by Senator King, as well as press statements by Senator Coons and Senator Portman. The bill was referred to the Committee on Finance. The full text of S. 2800 should be available on shortly.

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