Tax penalty hits student loan borrowers in income-driven repayment plans for the first time

This post originally appeared on TICAS.org.

By: Diane Cheng | April 12, 2018

Tax penalty hits student loan borrowers in income-driven repayment plans for the first time

As Americans across the country scramble to finish their taxes this month, some federal student loan borrowers are facing a new obstacle for the first time – a larger tax bill due to student debt that was forgiven through income-driven repayment (IDR). Long recognized as a policy design flaw and looming threat for borrowers in IDR, this unfair tax penalty will become a growing problem for struggling borrowers in the years ahead and policymakers need to act quickly to address it because borrowers should not be hit with a potentially unaffordable tax bill after making responsible loan payments for 20 or 25 years.

Read the full post on The Institute for College Access & Success (TICAS) website here.

Diane Cheng is the Associate Research Director at The Institute for College Access & Success.

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