What you need to know about California and Student Loans
California is leading the charge in helping people with their student loan debt. For the federal government and in other states, student debt that has been canceled or forgiven is treated as taxable income.
So if a borrower has $90k forgiven, that adds $90k to their taxable income for that year. However, California has expanded income tax exclusion for canceled or forgiven student loan debt.
Starting in 2017 and lasting until January 1st, 2022, the exclusion applies to federal loan plans such as:
- Pay as you earn
- Revised pay as you earn
While this will not affect the tax status of student loan benefit such as those offered by student loan genius, California’s bill is a big step in the right direction, helping those crushed by student loan debt.
If you’re a California resident, reach out to your local representative to learn more about Assembly Bill No. 461 – Chapter 525.
If you’ve got questions we can help with, please contact us.