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However, according to the Tax Foundation, a provision in the American Rescue Plan Act (ARPA) of 2021 temporarily exempted student loan forgiveness under IDR plans from federal taxation through 2025.
CNBC reported that the student loan interest deduction allows qualifying borrowers to deduct up to $2,500 a year in interest paid on eligible private or federal education debt.
In the summer of 2023, the Supreme Court ruled to strike down Biden’s student loan forgiveness program, which would have canceled up to $20,000 of debt for roughly 43 million eligible borrowers.
The Federal Direct Loan Program has accumulated a very large outstanding loan portfolio of about $1.5 trillion and this number will continue to rise along with the percentage of defaults. A common concern associated with the program is the effect on the economy and repercussions for students that must repay these loans.
The Tax Foundation explained in a blog post that while student loan forgiveness is generally included in taxable income, “the current tax code contains a complicated patchwork of exceptions.”
The largest is a $145 billion increase that’s partly due to changes the Biden administration made to student loan repayment plans and a new, proposed forgiveness program that would waive some ...
In the United States, student loans are a form of financial aid intended to help students access higher education. In 2018, 70 percent of higher education graduates had used loans to cover some or all of their expenses. [1] With notable exceptions, student loans must be repaid, in contrast to other forms of financial aid such as scholarships, which are not repaid, and grants, which rarely have ...
Since March 2020, federal student loan payments have paused with interest rates set to 0%. Meanwhile, the Biden administration’s plan to cancel up to $20,000 in student loan debt is still on hold.
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