Advocates hope that a key provision in the US bailout will allow President Joe Biden to write off the student loan debt of millions of Americans.
While the $ 1.9 trillion COVID-19 stimulus bill has not wiped out student debt, it has made future student loan forgiveness tax-exempt for the next several years. Now advocates and some lawmakers are hoping this provision could allow President Biden to cancel outstanding student loans.
Senate Democrats, led by Senator Elizabeth Warren (D-MA) and Senator Bob Menendez (D-NJ), included the provision in the bill, allowing there to be no tax on student loans canceled until 2025.
“This is a huge win for millions of Americans burdened with student loan debt – NO SURPRISE TAX BILLS on canceled college loans,” Menendez tweeted after its amendment with Warren passed in the Senate in early March.
When student loans are canceled, usually as part of an income-oriented repayment plan, they are usually treated as taxable income. Now that the COVID-19 relief bill has been enacted, some are hoping Biden will expand the pool of people with canceled debt. According to some estimates, 45 million borrowers hold $ 1.7 trillion in student debt in America.
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Biden previously expressed support for Congress to eliminate $ 10,000 in student loan debt for individuals. However, when asked at a CNN town hall in February if he would increase that proposal to $ 50,000, he said he “wouldn’t do that.”
Sen. Chuck Schumer (D-NY) and Rep. Ayanna Pressley (D-MA) have a total of 62 cosponsors supporting a resolution calling on Biden to write off $ 50,000 in student loan debt using existing authority under the higher education law. Biden said he didn’t think he had the power to do it by executive order. Schumer and Warren publicly disapproved of this assessment.
RELATED: Biden Says He Won’t Write Off $ 50,000 in Student Loan Debt