The Student Loans Conversation Just Took A New Turn

Nationwide, many Democrats insist that Joe Biden’s cancellation of student loan debt is a positive thing. Although a minority of Democrats are pushing back, claiming it sends the wrong message or doesn’t get to the root of the issue creating these loans.

Republicans, on the other hand, are pointing out the fiscal damages of Biden’s policies. Everyday Americans’ expenses and taxes will soar because of the president forcing everyone to pay the bills of individuals who ran up student loans.

However, people in under half of the nation’s states who reap the benefit of loan forgiveness may soon see their taxes surge considerably.

Offsetting Potential Gains From Student Loan Forgiveness
In 13 states, there’s a fairly high likelihood of “forgiven” debt carriers seeing their taxes surge to the tune of at least hundreds of dollars in 2023. The following states that count forgiven loans as personal income are as follows:

  • Wisconsin
  • Arkansas
  • Hawaii
  • West Virginia
  • Idaho
  • Virginia
  • Kentucky
  • South Carolina
  • Massachusetts
  • Pennsylvania
  • Minnesota
  • New York
  • Mississippi

Biden’s debt forgiveness program ranges from $10,000 to $20,000 per borrower. While the $20,000 is applicable only to Pell Grant recipients, this higher amount of forgiven debt still often leads to greater taxation.

After 2025, the forgiven student loan debt may also be federally taxable as well. Federal taxation, in this case, will not immediately go into effect, owing to provisions in the 2021 American Rescue Plan.

No Word From the White House
The Biden administration has been vocal about what it perceives to be benefits of the student loan forgiveness program. It’s been branded as a humane measure to help the middle class. However, the White House remains silent about the state and federal tax increases to come because of these loans.

Conservatives, on the other hand, repeatedly warned there’s no free lunch in life. Many people who see their taxes increase will experience this amid a recession.

All of this news follows speculation that Biden’s student loan forgiveness program was a politically calculated move to help Democrats scoop up extra votes during the midterms.