A major shift in student loan policy could lead to unexpected tax burdens for borrowers receiving forgiveness under income-driven repayment plans. Under new rules, forgiven loans—previously tax-exempt—will now be treated as taxable income starting next year, potentially tripling tax bills for affected individuals. The change disproportionately impacts middle-income households, including families earning around $60,000 annually. Experts warn this could create financial strain for borrowers who relied on the previous tax-free forgiveness structure.
A new study says tax bills could triple for people who receive student loan forgiveness through income-driven repayment (IDR) plans. Previously, forgiven student loans were exempt from federal income tax, but that provision expired at the end of 2025. An average married couple with two dependents earning around $60,000 could see their tax bill go up by...
