House Democrats are pushing to exempt people from having to pay taxes on forgiven student loan debt.
The 34 Democrats, led by Rep. Jim McDermott (Wash.), say the current set-up is unfair: Student loan borrowers who generally keep up with their payments can have their debts forgiven after about 20 to 25 years.
{mosads}The problem, Democrats say, is that the forgiven debt is usually considered taxable income by the IRS, sometimes leaving former students with a hefty tax bill.
The Democrats’ bill would generally exclude forgiven debt from a taxpayer’s gross income, and comes after Democrats have increasingly made an issue of college affordability. Sen. Bernie Sanders (I-Vt.), a candidate for the Democratic nomination in 2016, just rolled out a plan to make college free, while President Obama proposed free community college this year.
“Slamming students and families with a massive tax bill after they have played by the rules is just wrong,” McDermott said in a statement. “This bill is yet another step toward leveling the playing field for a generation students being devastated by the growing student loan crisis in this country.”