Student Loan Tax Elimination Act

# Student Loan Tax Elimination Act Summary **What the bill would do:** The Student Loan Tax Elimination Act would eliminate federal taxes on student loan forgiveness. Currently, when student loans are forgiven through programs like Public Service Loan Forgiveness or income-driven repayment plans, borrowers may owe income taxes on the forgiven amount as if it were regular income. This bill would change that by making forgiven student loan debt tax-free, potentially saving borrowers thousands of dollars when their loans are discharged. **Who it affects:** This bill primarily affects student loan borrowers who have their loans forgiven through federal programs, as well as federal and state governments (through reduced tax revenue).

It could be particularly significant for public servants, low-income borrowers in income-driven repayment plans, and people whose loans are forgiven due to disability or school closure. **Current status:** The bill (S 3538) was introduced in the 119th Congress by Senator Jim Banks (R-IN) and is currently in committee, meaning it has not yet been voted on by the full Senate. At this stage, the bill has not been enacted into law.