House Dem bill: Help student loan debtors

House Democrats are pushing to exempt people from having to pay taxes on forgiven student loan debt.

The 34 Democrats, led by Rep. Jim McDermott (Wash.), say the current set-up is unfair: Student loan borrowers who generally keep up with their payments can have their debts forgiven after about 20 to 25 years.

{mosads}The problem, Democrats say, is that the forgiven debt is usually considered taxable income by the IRS, sometimes leaving former students with a hefty tax bill.

The Democrats’ bill would generally exclude forgiven debt from a taxpayer’s gross income, and comes after Democrats have increasingly made an issue of college affordability. Sen. Bernie Sanders (I-Vt.), a candidate for the Democratic nomination in 2016, just rolled out a plan to make college free, while President Obama proposed free community college this year.   

“Slamming students and families with a massive tax bill after they have played by the rules is just wrong,” McDermott said in a statement. “This bill is yet another step toward leveling the playing field for a generation students being devastated by the growing student loan crisis in this country.”