Congress makes student debt forgiveness tax-free, limits revenue that for-profit colleges get from

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President Biden is slated to sign into law this week a $1.9 trillion stimulus package that clears one hurdle for broad student debt cancellation and tightens federal regulation of for-profit colleges.

Congressional leaders seized an opportunity to accomplish some long-standing objectives through the latest pandemic relief bill, which passed the House on Wednesday. Chief among them is eliminating the tax burden many student loan borrowers would face if any portion of their debt was discharged.

The tax relief is good only through January 2026, but lawmakers say it is a key step in canceling some of the $1.5 trillion in federal student loans held by 45 million Americans. Among the many concerns surrounding widespread forgiveness is whether debt relief would be subject to taxation, which could undermine the benefit to borrowers and ultimately the economy.

“This change clears the way for President Biden to use his authority to cancel $50,000 in student debt to provide a massive stimulus to our economy, help narrow the racial wealth gap, and lift this impossible burden off of tens of millions of families,” Sen. Elizabeth Warren (D-Mass.) said in a statement after the Senate passed the stimulus package Saturday.

https://www.washingtonpost.com/education/2021/03/10/student-debt-forgiveness-for-profit-colleges-stimulus/

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