The Senate version of the $ 1.9 trillion COVID-19 aid package, which the chamber released on Saturday, was amended to abolish taxes on forgiven student loans until 2025, the Wall Street Journal reports.
Why it matters: The provision, taken up by Democrats this week, paves the way for President Biden to cancel student debt through executive action – one of his campaign pledges – without burdening thousands of Americans with a new tax.
- Federal law usually treats forgiven debts as taxable income. Biden’s pledge to forgive up to $ 10,000 in debt per person would have “increased many households’ tax bills by a greater amount than the monthly payments they would have made on the debt for that year,” said Adam Looney, a former civil servant. from Obama. .
Where it is: The House is now expected to pass the bill for President Biden to sign it into law.
- The government will lose about $ 44 million in revenue from the provision, WSJ writes, citing Congress’s joint tax committee.
Details: All federal student loans are eligible, including state education loans, institutional loans, private student loans, and private parent loans.