H.R. 2492: Real Loan Forgiveness

Both the Income-Based Repayment (IBR) and the Income Contingent Repayment (ICR) programs allow borrowers to make affordable monthly student loan payments over an extended period of time, and any outstanding balance after 25 years of repayment is forgiven. Under current law, though, the balance forgiven after 25 years of repayment is treated as taxable income to the borrower. Student loans forgiven under other programs, including Public Service Loan Forgiveness and TEACH Grants, are not treated as taxable income.

H.R. 2492, introduced by Representative Sander Levin (D-MI) and co-sponsored by Representative Pat Tiberi (R-OH), would ensure that federal student loan debt forgiven under IBR and ICR is not taxed as income. TICAS sent this letter to Members of Congress, asking them to support H.R. 2492. To date this legislation already has more than 40 co-sponsors in the House, and is gaining momentum.

A number of higher education associations, student and consumer advocates, lenders, and think tanks support H.R. 2492:

American Association of Collegiate Registrars and Admissions Officers
American Association of Community Colleges
American Association of State Colleges and Universities
American Council on Education
American Student Assistance
Association of American Universities
Association of Community College Trustees
Association of Jesuit Colleges and Universities
Association of Public and Land-grant Universities
The College Board
Consumer Bankers Association
Council for Opportunity in Education
Council of Graduate Schools
Equal Justice Works
The Financial Services Roundtable
Great Lakes Higher Education Corporation
Hispanic Association of Colleges and Universities
National Association for College Admission Counseling
National Association for Equal Opportunity in Higher Education
National Association of Independent Colleges and Universities
National Association of Student Financial Aid Administrators
State Higher Education Executive Officers
United States Public Interest Research Group
United States Student Association

The Institute for College Access & Success (TICAS), which runs the Project on Student Debt, has outlined scenarios of borrowers using IBR and the degree to which they could benefit from H.R. 2492.

If your representative is not already a co-sponsor, click here to ask your member of Congress to support HR 2492.

For more information on Income-Based Repayment generally, see IBRinfo.org, a comprehensive resource for consumers that explains the program (as well as Public Service Loan Forgiveness), answers frequently asked questions, and has a place to sign up for email updates about important developments.

There is more to be done to tackle rising student debt. See our policy agenda for more information, and join our mailing list for future updates.