Help For Student Loan Borrowers: Biden-Harris Administration, IDR, PSLF, And Many More

To help student loan borrowers, the Biden-Harris Administration launched programs that are tax-exempted.

Programs such as the IDR and the PSLF were made under the Biden-Harris Administration to send help for student loan borrowers.(Photo: WGVU NEWS)

Help From The Biden-Harris Administration

Around 3.6 million Americans have benefited from student loan forgiveness programs such as those by the Biden-Harris Administration, but now they may face another burden: paying taxes on the forgiven amount.

The Biden-Harris administration recently approved $4.8 billion to help over 80,000 student borrowers through programs like Income-Driven Repayment Discharge (IDR) and Public Service Loan Forgiveness (PSLF).

However, when student loans are canceled, the forgiven amount is typically considered taxable income under federal law, unless the program, such as those by the Biden-Harris Administration, is tax-exempt.

PSLF and Borrower Defense to Repayment Discharge by the Biden-Harris Administration are exempt from federal taxes, but various IDR programs are subject to taxes.

According to a published article by Marca.com, the Total and Permanent Disability Discharge (TPDD) is tax-free just like the programs by the Biden-Harris Administration, until January 31, 2025, but it is unclear how taxes will be applied to it from January 1, 2026, onwards.

While some states have declared forgiven student loans taxable unlike those by the Biden-Harris Administration, others are reviewing their legislation and will hopefully be tax-exempted like those from the Biden-Harris Administration.

It’s important to be aware of your specific program to understand your potential tax liability.

Student Loan Interest Deduction

In a published article by NerdWallet, the student loan interest deduction allows college students or parents who took on student debt to deduct up to $2,500 in interest paid from their taxable income. If you didn’t make any payments in 2023 due to the payment freeze on federal student loans, you likely won’t have any interest to deduct.

However, if you made payments on capitalized federal loan interest or on loans that are not eligible for the payment freeze, such as private student loans, you can still deduct the interest paid.

The deduction is available if your modified adjusted gross income (MAGI) is less than $70,000 ($145,000 if filing jointly), and the amount deductible decreases for MAGIs between $70,000 and $85,000 ($175,000 if filing jointly).

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