Student Loan Tax Relief Act
Bill: S.496 | Sponsor: Sen. Menendez, Robert (D-NJ)
Policy area: Taxation

Summary:
Student Loan Tax Relief Act
This bill modifies tax provisions allowing an exclusion from gross income for income arising from discharges of student loan debt after January 31, 2020. This includes loans for postsecondary educational expenses, private education loans, and loans made by tax-exempt educational organizations.
The bill eliminates the temporary expiration date for the exclusion and the death or total and permanent disability requirement for a discharge.

To amend the Internal Revenue Code of 1986 to exclude from taxable 
           income any student loan forgiveness or discharge.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Tax Relief Act''.

SEC. 2. MODIFICATION OF TREATMENT OF STUDENT LOAN FORGIVENESS.

    (a) In General.--Section 108(f) of the Internal Revenue Code of 
1986 is amended--
            (1) by striking paragraphs (1) and (2) and inserting the 
        following:
            ``(1) In general.--In the case of an individual, gross 
        income does not include any amount which (but for this 
        subsection) would be includible in gross income by reasons of 
        the discharge (in whole or in part) of--
                    ``(A) any loan provided expressly for postsecondary 
                educational expenses, regardless of whether provided 
                through the educational institution or directly to the 
                borrower, if such loan was made, insured, or guaranteed 
                by--
                            ``(i) the United States, or an 
                        instrumentality or agency thereof,
                            ``(ii) a State, territory, or possession of 
                        the United States, or the District of Columbia, 
                        or any political subdivision thereof, or
                            ``(iii) any institution of higher 
                        education,
                    ``(B) any private education loan (as defined in 
                section 140(a)(7) of the Truth in Lending Act),
                    ``(C) any loan made by any educational organization 
                described in section 170(b)(1)(A)(ii) if such loan is 
                made--
                            ``(i) pursuant to an agreement with any 
                        entity described in subparagraph (A) or any 
                        private education lender (as defined in section 
                        140(a) of the Truth in Lending Act) under which 
                        the funds from which the loan was made were 
                        provided to such educational organization, or
                            ``(ii) pursuant to a program of such 
                        educational organization which is designed to 
                        encourage its students to serve in occupations 
                        with unmet needs or in areas with unmet needs 
                        and under which the services provided by the 
                        students (or former students) are for or under 
                        the direction of a governmental unit or an 
                        organization described in section 501(c)(3) and 
                        exempt from tax under section 501(a), or
                    ``(D) any loan made by an educational organization 
                described in section 170(b)(1)(A)(ii) or by an 
                organization exempt from tax under section 501(a) to 
                refinance a loan to an individual to assist the 
                individual in attending any such educational 
                organization but only if the refinancing loan is 
                pursuant to a program of the refinancing organization 
                which is designed as described in subparagraph 
                (C)(ii).'';
            (2) by striking paragraph (5);
            (3) by redesignating paragraphs (3) and (4) as paragraphs 
        (2) and (3), respectively; and
            (4) in paragraph (2), as so redesignated, by--
                    (A) striking ``made by an organization described in 
                paragraph (2)(D)'' and inserting ``made by an 
                organization described in paragraph (1)(C) or made by a 
                private education lender (as defined in section 
                140(a)(7) of the Truth in Lending Act)''; and
                    (B) inserting ``or for such private education 
                lender'' after ``either such organization''.
    (b) Effective Date.--The amendments made by this section shall 
apply to discharges of loans after January 31, 2020.
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