MADISON, Wis. — U.S. Representative Mark Pocan (WI-2) today introduced legislation that would ease the financial burden for student loan borrowers. The Relief for Underwater Student Borrowers Act would allow student loan borrowers who have been granted debt relief as a result of consistent repayment towards their student loan debt an exemption from being taxed on the amount forgiven.
“Once again U.S. Rep Mark Pocan has hit it out of the park with his support for common sense student loan debt reforms,” said One Wisconsin Now Executive Director Scot Ross. “Rep. Pocan’s legislation is all about fairness. The last thing a hard-working student loan borrower should get after paying their loans 10 or 20 years is a tax bill on their remaining payment.”
This legislation bolsters President Obama’s expansion of the “Pay As You Earn” program. Under current law, only those who have careers in public service and are enrolled in the Public Service Loan Forgiveness program are exempt from being taxed on the amount forgiven after 10 or 20 years.
Original research from One Wisconsin Institute showed borrowers reported making an average payment of $350 a month on their student loans for nearly 19 years for an undergraduate degree. The research also found that student debt is a significant, negative drag on the economic activity of borrowers and the economy as a whole. Borrowers are significantly more likely to rent versus own their own home and buy a used versus new vehicle.
According to recent numbers, there are 1.4 million people enrolled in the Income Based Repayment program nationally.