school loan info from AAUW

Make Student Loan Forgiveness a Reality - contact your representative to encourage support for this bill
AAUW actively supported the College Cost Reduction and Access Act, which became law in September 2007, as an important step toward making college more affordable and accessible. Beginning this Wednesday, July 1, new benefits associated with the CCRAA will make student loan payments more manageable for millions of Americans. Among the benefits are lower interest rates on federal loans, higher Pell Grant scholarships, and a new Income-Based Repayment program, which caps federal student loan payments based on the borrower's income and family size. For most eligible borrowers, IBR loan payments will be less than 10 percent of their income-and even smaller for borrowers with low earnings. The IBR program will also forgive remaining federal debt, if any, after 25 years of payments. This is great news for students and their families who struggle with the soaring costs of college and the overwhelming burden of student loan debt, so be sure to spread the word to family and friends. The Income-Based Repayment program will be a great help for those who struggle with student loans, but there is still one problem that needs to be addressed. While most borrowers will pay off their debt in full, those responsible borrowers who are still paying off their college education 25 years later will be taxed on the forgiven amount as income under current law. This would not only create a new financial obligation for borrowers, but the threat of a significant future tax liability may prevent those who could benefit most from the IBR program from taking advantage of it in the first place. In addition, many borrowers may not realize the loan forgiveness is taxed and may have a hard time paying this unexpected expense. For these reasons, Reps. Sander Levin (D-MI) and Pat Tiberi (R-OH) recently introduced H.R. 2492, which would prevent the taxation of federal student loan debt forgiven through the IBR program and make the ideals behind loan forgiveness a reality. Current law already exempts other kinds of loan forgiveness from taxation, including Public Service Loan Forgiveness; H.R. 2492 would make the same true for student loan forgiveness.