00:00A large teachers union is seeking to expand their lawsuit against the Department of Education over student loan forgiveness.
00:09The American Federation of Teachers filed suit in March but are now seeking class action status.
00:17They claim the Trump administration is denying borrowers access to some repayment programs.
00:22They also claim the administration is withholding the cancellation of debt until the American Rescue Plan Act of 2021 expires.
00:32That law shielded all student loan forgiveness from taxation at the federal level but ends on December 31st this year.
00:40I was very disappointed but not necessarily surprised that this Congress didn't extend the tax moratorium.
00:47I do hope that a future Congress realizes the impact of taxing this liability and changes their mind in the future but there's no guarantee that they're going to.
00:57For those who have their loans forgiven next year you'll get taxed as though it's income but only for borrowers on income-based repayment plans.
01:06So if you get federal student loan forgiveness due to public service loan forgiveness or if the loans are discharged due to death or permanent disability, that's not taxed.
01:17If you are one of those people facing a tax bill, that bill will likely be around 20% of what was forgiven.
01:24Debt relief predominantly comes to borrowers with below median incomes.
01:29Forgiveness under the income-driven plans doesn't happen until you've been on the plan for 20 or 25 years.
01:34So, you know, someone who maybe had a zero-dollar payment for most or all of that time, it means that, you know, their income, you know, they're not swimming in money.
01:45The IRS does have some options to help people who cannot pay off their tax debt.
01:51For more information, you can read our news article on this story by downloading the Straight Arrow News mobile app or by visiting us online at san.com.
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