In several Creditbloggers posts, we have talked about the new student loan relief program, Income Based Repayment, or IBR. For those who are eligible, the Income-Based Repayment (IBR) program forgives any remaining debt — including interest — after 25 years. While most borrowers will pay off their debt before then, those that don't will be hit with a tax bill at the end of the repayment period. That's because the IRS considers forgiveness of debt taxable income.
The folks at IBRinfo.org are asking citizens to take action on a new bipartisan bill in the U.S. House of Representatives, H.R. 2492, that would prevent the taxation of debt forgiven through IBR. Loan forgiveness is supposed to wipe the slate clean for responsible borrowers, not create a new financial obligation. Current law exempts some kinds of loan forgiveness from taxation, including Public Service Loan Forgiveness, but not IBR. They are asking you to take a moment to write to your representative and urge them to support H.R. 2492 and ensure that there's really a light at the end of the tunnel for responsible borrowers.
It will take just two minutes to send a message to your Congressional Representative to support this measure to waive tax bills on forgiven student loan debt under the IBR program.