In June we mentioned new federal programs that could help students unload, or at least manage, a bit of the student debt they incurred during their undergrad and law school years.
If you'll recall, the program, which took effect July 1, gave some borrowers access to an income-based repayment plan. Under the new program, whatever debt is not paid back after 25 years is forgiven, and the period is even shorter, 10 years, for those who go into public service.
But we didn't mention one teensie little catch to that whole "forgiveness" thing.
Truth is, even if your loan is forgiven after those 25 years, the amount forgiven would be taxed as income to the borrower, according to an email sent out by the Project on Student Debt.
As a possible solution, H.R. 2492 was introduced in May. The bill, which looks like it's still set to be reviewed by the House Ways and Means Committee, would amend the Internal Revenue Code of 1986 to keep the forgiven amount from being reported as income. This would only apply to borrowers whose repayment plans were income contingent or income based.
Find out more about the bill at the Project on Student Debt, which allows you to fill out and print a form letter that you can send to your representative to urge them to show their support if you are so inclined.
You can track the bill's progress here.