Publication | July 15, 2020

Tax Consequences of Student Loan Discharges for Borrowers in Income-Driven Repayment Plans

This brief illustrates that while many borrowers in IDR will repay their loans in full, those who do receive a discharge of remaining debt after 20 or 25 years of responsible payments may face an unaffordable tax liability because these discharged amounts are treated as taxable income under current law.