Paving the Way to Student Debt Cancellation: Forgiveness in the American Rescue Plan

Last Updated: March 1, 2021

Forty-six million student loan borrowers in the U.S. carry $1.67 trillion in debt. Canceling student debt would remove this burden and could significantly boost the economy. However, the potential threat of surprise tax bills on borrowers has been a concern for student debt cancellation efforts.

The American Rescue Plan Act put that concern to rest by making student debt cancellation tax-free through 2025. This change, while it got little attention at the time, could significantly ease student debt cancellation over the next four years.