In general, canceled private student loan debt is considered taxable income. However, there are exceptions that may apply to your situation. Here’s a clear and concise explanation:
- General Rule: If your private student loan debt is canceled, forgiven, or discharged, the amount forgiven is typically considered taxable income.
- Exceptions: Under the American Rescue Plan Act of 2021, there is a temporary exclusion for student loan forgiveness. This exclusion applies to loans discharged between December 31, 2020, and January 1, 2026
- If your loan was discharged within this period, the forgiven amount is not considered taxable income.
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