The Income Driven Student Loan Forgiveness Act

The Income Driven Student Loan Forgiveness Act Summary​

The Income Driven Student Loan Forgiveness Act proposes to forgive the outstanding balance of federal student loans for eligible borrowers who meet certain income requirements, essentially allowing individuals to have their remaining student loan debt erased after making payments based on their income over a set period, usually through an income-driven repayment (IDR) plan, if they meet the specified income thresholds. 

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Key points about the act:

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Eligibility:

Borrowers must have eligible federal student loans in repayment, meet income criteria (e.g., adjusted gross income below a specific limit), and may need to demonstrate employment history. 

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Application process:

Borrowers would need to submit an application to the Department of Education to qualify for loan forgiveness. 

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Income-based repayment:

The act likely relies on existing income-driven repayment plans where monthly payments are calculated based on a percentage of the borrower's income. 

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Forgiveness amount:

The act aims to forgive the remaining balance of principal, interest, and fees on qualifying federal student loans. 

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Tax implications:

The forgiven debt may be excluded from an individual's taxable income under the act.