Student-loan borrowers who get debt relief over the next decade may see their tax bills triple

A Protect Borrowers analysis estimates that student-loan forgiveness could raise borrowers’ federal tax costs and reduce tax credits. In one example, a married couple with two children and $60,000 in annual income would face about $7,200 in added costs after roughly $50,000 in debt was canceled.

Across the cases examined, the estimated additional costs ranged from about $6,000 to $12,000. The analysis applied federal tax rules for 2026 and used the average balance forgiven through income-driven repayment.

Those repayment plans cancel remaining debt after 20 or 25 years, depending on when a borrower first took out loans. The American Rescue Plan had exempted forgiven debt from federal income tax, but that measure ended in 2025.

Some borrowers have said they are worried about the resulting bills. Misty Knapp, who was six payments from relief, said she was concerned about paying the taxes tied to forgiveness.

Democratic lawmakers have urged the government to reinstate the tax exemption. Last year, a group wrote to the Treasury Department, pointing to an earlier estimate that affected borrowers could lose $5,800 to $10,000.