|Posted:||July 19, 2021 07:39 AM|
|From:||Representative Brian Sims|
|To:||All House members|
|Subject:||Tax-Free Student Loan Forgiveness|
|In 2020, U.S. student loan debt reached a record high of $1.57 trillion. In the same year, nearly 75 percent ($1.1 trillion worth) of student loan accounts were reported to be in forbearance or deferral. Further, the College Board has reported that the average cost to attend a public four-year institution has nearly tripled over the past three decades. It is no secret that pursuing a higher education in America is financially burdensome to many.
On March 11, 2021, President Joe Biden signed the American Rescue Plan Act of 2021 into law. This act made all student loan forgiveness federally tax-free until January 1, 2026. Unfortunately, Pennsylvania is one of five states that does not base income on federal tax rules. Even when student loans are forgiven, they are treated as additional income subject to tax. Moreover, the average student loan balance in Pennsylvania as of 2020 was $38,166 – a nine percent increase since 2019.
Pennsylvanians deserve some additional relief from the strain of student loans, which is why my legislation would make student loan forgiveness in Pennsylvania tax-free until January 1, 2026. This proposal would not only have Pennsylvania tax rules integrate with that of the federal government, but would also align us with the other states which conform to federal tax rules.
Please join me in co-sponsoring this important legislation to reduce confusion and provide consistency for Pennsylvanians with student loans.
Introduced as HB1805