Paul L. Caron

Tuesday, September 9, 2014

COD Income and Student Loan Debt Forgiveness

Tax Analysys Logo (2013)Kiran Sheffrin, Trapped by Forgiveness: Taxing COD Income, 144 Tax Notes 1191 (Sept. 8, 2014):

In this article, Sheffrin discusses the student loan debt crisis and problems with the current proposals for reform. She identifies two ways that the tax treatment of forgiven student loans can be used to achieve policy goals: partial recognition of cancellation of indebtedness income based on a household’s ability to pay, and spreading the payment of amounts owed over a fixed number of years.

Scholarship, Tax, Tax Analysts | Permalink


IIRC, Obama made some notions 12-18 months ago about needing to make loan forgiveness under IBR and PAYE tax-free when Congress renewed the Higher Education Act this fall (or more likely, after midterms). Now his silence on the topic is only broached by offering to gut the PSLF program that Bush 43 passed into law to appease a bunch of Republicans who voted in favor of it seven years ago. It's all very disappointing. If I were a betting individual - actually, I suppose I am, since I borrowed money to attend law school in the 21st century - I would say there is a better chance that any and all income-based-repayment programs are cancelled before anyone has their loans forgiven than there is a chance that Congress might remove the tax bomb.

Posted by: Unemployed Northeastern | Sep 9, 2014 7:56:41 AM