WASHINGTON, D.C. - U.S. Senator Chris Coons (D-DE) today was joined by Senators Debbie Stabenow (D-MI), Jeanne Shaheen (D-NH), Jack Reed (D-RI), Tammy Baldwin (D-WI), Gary Peters (D-MI), Dianne Feinstein (D-CA), and Jeff Merkley (D-OR) in introducing the Student Tax Relief Act, a bill that would protect defrauded student borrowers from being taxed on their forgiven loans. This legislation follows actions by the Department of Education to protect defrauded students at 100 Corinthian Colleges across the country and ensures that borrowers at any schools whose loans were forgiven receive the same tax relief.
“Figuring out which college to go to and how to pay for it is hard enough without being subjected to false advertising from higher ed institutions,” said Senator Coons. “Forgiving the loans of students who are victims of fraudulent institutions is the right thing to do, but requiring them to pay a hefty tax on that forgiven loan still leaves many of these students struggling to make ends meet and afford continuing their education. We should be doing everything we can to help students afford the college that fits their needs, not making it harder.”
The Senators joined their colleagues in sending a letter to Department of Education Secretary John King in April and President Obama in March calling on the Administration to provide fair debt relief to victims of unlawful or deceptive practices in higher education through a tough borrower defense rule. More information on the decision by the Department of Education to discharge loans of defrauded students may be found here and the full list of the schools eligible for a loan discharge may be found here.