Student loan forgiveness, tax bill
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What if your employer could help pay down your student loans, without it coming out of your paycheck or being taxed? Employers have been able to help pay down student loans tax-free for some time, and the recent One Big Beautiful Bill Act has made this benefit permanent,
Now, under Trump’s sweeping tax plan — dubbed the “One Big Beautiful Bill” (OBBB) — student loan forgiveness, repayment rules, and related taxes are in the news again.
The American Rescue Plan Act of 2021 made student loan forgiveness tax-free at the federal level through 2025. This applies to federal and certain private loans discharged under qualifying programs.
Grad PLUS loans will be eliminated. Graduate students will still be able to borrow federal student loans, but will be capped at $20,500 annually, $100,000 total. Federal student loan borrowers will now have a lifetime limit, considering undergraduate and graduate education, of $257,500 in federal student loans.