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Lawmakers Warn of $10K Tax on Student Loan Forgiveness

11/15/2025

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Sanders and Warren Warn

Senators Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) warn that borrowers could face taxes up to $10,000 starting in 2026 due to expiration of forgiven debt exemptions.
The American Rescue Plan's exemption for student loan forgiveness from federal income tax ends on December 31, 2025.
Lawmakers are urging Treasury Secretary Scott Bessent to take executive action to shield borrowers from these tax liabilities, arguing the change undermines income-driven repayment relief.

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Trump Revamps Student Loans

U.S. President Donald Trump announced changes to student loan forgiveness, effective July 2026.
The rules exclude some public service workers from forgiveness if employers support undocumented immigrants.
Most forgiven loans will be taxed by federal and state authorities starting January 2026.
Department of Education will implement a Repayment Assistance Plan in 2026, replacing income-driven plans by 2028.
Total U.S. student loan debt totals $1.78 trillion, while Wisconsin residents average $32,800.

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Sanders and Warren Warn

Senators Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) warn that borrowers could face taxes up to $10,000 starting in 2026 due to expiration of forgiven debt exemptions.
The American Rescue Plan's exemption for student loan forgiveness from federal income tax ends on December 31, 2025.
Lawmakers are urging Treasury Secretary Scott Bessent to take executive action to shield borrowers from these tax liabilities, arguing the change undermines income-driven repayment relief.

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