II 

117TH CONGRESS 

1ST SESSION S. 496 

To amend the Internal Revenue Code of 1986 to exclude from taxable income 

any student loan forgiveness or discharge. 

IN THE SENATE OF THE UNITED STATES 

MARCH 1, 2021 

Mr. MENENDEZ (for himself and Ms. WARREN) introduced the following bill; 

which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to exclude 

from taxable income any student loan forgiveness or 

discharge. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Loan Tax Re5 lief Act’’. 

6 SEC. 2. MODIFICATION OF TREATMENT OF STUDENT LOAN 

7 FORGIVENESS. 

8 (a) IN GENERAL.—Section 108(f) of the Internal 

9 Revenue Code of 1986 is amended— 


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1 (1) by striking paragraphs (1) and (2) and in2 serting the following: 

3 ‘‘(1) IN GENERAL.—In the case of an indi4 vidual, gross income does not include any amount 

5 which (but for this subsection) would be includible in 

6 gross income by reasons of the discharge (in whole 

7 or in part) of— 

8 ‘‘(A) any loan provided expressly for post9 secondary educational expenses, regardless of 

10 whether provided through the educational insti11 tution or directly to the borrower, if such loan 

12 was made, insured, or guaranteed by— 

13 ‘‘(i) the United States, or an instru14 mentality or agency thereof, 

15 ‘‘(ii) a State, territory, or possession 

16 of the United States, or the District of Co17 lumbia, or any political subdivision thereof, 

18 or 

19 ‘‘(iii) any institution of higher edu20 cation, 

21 ‘‘(B) any private education loan (as de22 fined in section 140(a)(7) of the Truth in Lend23 ing Act), 


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1 ‘‘(C) any loan made by any educational or2 ganization described in section 170(b)(1)(A)(ii) 

3 if such loan is made— 

4 ‘‘(i) pursuant to an agreement with 

5 any entity described in subparagraph (A) 

6 or any private education lender (as defined 

7 in section 140(a) of the Truth in Lending 

8 Act) under which the funds from which the 

9 loan was made were provided to such edu10 cational organization, or 

11 ‘‘(ii) pursuant to a program of such 

12 educational organization which is designed 

13 to encourage its students to serve in occu14 pations with unmet needs or in areas with 

15 unmet needs and under which the services 

16 provided by the students (or former stu17 dents) are for or under the direction of a 

18 governmental unit or an organization de19 scribed in section 501(c)(3) and exempt 

20 from tax under section 501(a), or 

21 ‘‘(D) any loan made by an educational or22 ganization described in section 170(b)(1)(A)(ii) 

23 or by an organization exempt from tax under 

24 section 501(a) to refinance a loan to an indi25 vidual to assist the individual in attending any 


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1 such educational organization but only if the re2 financing loan is pursuant to a program of the 

3 refinancing organization which is designed as 

4 described in subparagraph (C)(ii).’’; 

5 (2) by striking paragraph (5); 

6 (3) by redesignating paragraphs (3) and (4) as 

7 paragraphs (2) and (3), respectively; and 

8 (4) in paragraph (2), as so redesignated, by— 

9 (A) striking ‘‘made by an organization de10 scribed in paragraph (2)(D)’’ and inserting 

11 ‘‘made by an organization described in para12 graph (1)(C) or made by a private education 

13 lender (as defined in section 140(a)(7) of the 

14 Truth in Lending Act)’’; and 

15 (B) inserting ‘‘or for such private edu16 cation lender’’ after ‘‘either such organization’’. 

17 (b) EFFECTIVE DATE.—The amendments made by 

18 this section shall apply to discharges of loans after Janu19 ary 31, 2020. 

Æ 


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