Student loan forgiveness may become tax-free under Covid relief bill. Here’s what that means for borrowers

A significant provision making any student loan forgiveness tax-free has been included in the $1.9 trillion federal coronavirus stimulus package that’s working its way through Congress and will likely soon be signed into law. Currently, any student loan debt canceled by the government can be considered taxable and levied at the borrower’s normal income tax rate. For example, if someone earns $50,000 a year, and was at a 22% tax rate, and received $30,000 in student loan forgiveness,
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