This Week In Washington
On Wednesday, the Treasury Department and the Internal Revenue Service (IRS) issued guidance providing tax relief to student borrowers whose federal loans were discharged due to their school closing or a borrower defense to repayment claim. The guidance provides that these borrowers will not have to report the discharged amount as gross income and that this exemption will apply retroactively for loans discharged on or after January 1, 2016. Also included in the guidance is tax treatment of private loans that are “discharged based on a settlement of a legal cause of action against nonprofit or other for-profit schools and certain private lenders.”
On Thursday, the House passed legislation that would overturn the borrower defense rule that makes it more difficult for students who claim they were defrauded by their college to receive loan forgiveness. Recall that last week Senate Democratic Whip Dick Durbin (D-IL) urged fellow Senators to overturn the borrower defense rule by supporting his Congressional Review Act resolution. The legislation will now head to the Senate for consideration.
News You Can Use
The Center for American Progress released a report on the high level of graduate school debt and offered a range of potential policy options, including capping federal graduate loans.
The Urban Institute examines how accounting standards for some income-driven repayment plans can harm mortgage eligibility for potential first-time homebuyers.
The Education Trust has a new brief that proposes advancing race-conscious policies in higher education.
The following bill(s) have been recently introduced for consideration by the 116th Congress (2019-2020):
H.R. 5613 – Relief and Investment for Student Entrepreneurs (RISE) Act [Rep. Ruben Gallego (D-AZ-7)] allows qualified entrepreneurs to temporarily defer Federal student loan payments, interest-free, for three years after starting a new business.