Posted on 11/13/2025 2:16:57 PM PST by fwdude
Advocates for student loan borrowers and Democratic lawmakers in Congress are sounding the alarm that recent legislative changes made by Republicans could result in substantial financial penalties for those who are pursuing student loan forgiveness.
Last week, Protect Borrowers (a student loan borrower advocacy organization) released a detailed analysis suggesting that, after congressional Republicans declined to extend tax relief for many Americans who are pursuing student loan forgiveness under income-driven repayment plans, borrowers could get slammed with thousands of dollars in unexpected tax liabilities. Senate Democrats followed up the analysis with a letter to Treasury Secretary Scott Bessent, arguing that he has legal authority to use executive action to shield borrowers from tax liability.
“This tax bomb will force working families to trade their crushing student loan debt for a crushing tax debt,” warned Protect Borrowers in a statement on Monday.
(Excerpt) Read more at forbes.com ...
Dear FRiends,
We need your continuing support to keep FR funded. Your donations are our sole source of funding. No sugar daddies, no advertisers, no paid memberships, no commercial sales, no gimmicks, no tax subsidies. No spam, no pop-ups, no ad trackers.
If you enjoy using FR and agree it's a worthwhile endeavor, please consider making a contribution today:
Click here: to donate by Credit Card
Or here: to donate by PayPal
Or by mail to: Free Republic, LLC - PO Box 9771 - Fresno, CA 93794
Thank you very much and God bless you,
Jim
Poetic justice for us who went without for DECADES to pay off student loans. I put off buying my first home until I was 47 because I wanted to be debt free when I applied for a mortgage.
Isn’t it income and you have to pay taxes on it
Indeed, forgiven debt is income. It’s no different than handing them money. Lots of it.
Sorry but how did they “earn” this?
Sue the Unis for Fraud.
Let me see if I understand this...
The gimmecrats bi+ched that they couldn’t afford loans because they couldn’t earn enough money (after 4 years of freeloading) to pay the debt. Then the loan debit is wiped out, which means they were given free money and now they’re bi+ching that they have to pay the taxes for the tens of thousands they got as gifts (isn’t the gift tax capped at ~$14k/year?).
Is that about right?
Are these idiots just waking up to the fact that forgiveness of indebtedness is picked up in income? LOL. Welcome to the real world.
We can fix this problem easily. How about no student loan forgiveness. Just who decides who gets forgiven and who does not. Why should one person have an unfair advantage over some one else. Those who paid off their loans and those who are currently paying them off get to pay for others forgiveness as well.
So, $14K in gift tax per year, x4 equals $56K, plus penalties and interest for all of those years...I guess the $70K figure in the headline could be correct.
It's clear they don't want to be held accountable in any way, shape or form for not repaying what they owe to America's taxpayers.
There's a name for this behavior: It's called "theft" (which, based on the amount many owe, would be "felony theft".)
The $14k you mentioned is now up to $19k. It is the amount one person can give to one other as a real gift (like between relatives or friends) without reporting it to the IRS. Any more starts counting against the lifetime estate exemption of the giver (now about $14 million). But even if above $19k it would still be untaxed.
If you don’t want to pay for it, don’t sign up for it. Even an idiot understands this.
Wait. I thought everything was going to be given to me for freeeeeee! 😭
—”It’s clear they don’t want to be held accountable in any way, shape or form for not repaying what they owe to America’s taxpayers.”
“The man who murdered his parents, and then pleaded for mercy on the grounds that he was an orphan.”
Abraham Lincoln
Evil. But not wrong.
Which is partly why I am against Income Tax.
It messes things up in so many ways.
“It’s not a gift if someone lent you money and then forgave it because they couldn’t collect on it. “
It is if it is a personal loan.
It is not if it is a commercial loan.
https://www.google.com/search?q=debt+forgiveness+versus+gift
Not a gift ...
What if the interest was struck, just give me the money given to you and a $10,000 loan fee, Then collect it all.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.