Bits
The Biden administration’s student loan relief scheme has gotten a lot of press. But there is an item that needs to be noted about this wave of the presidential wand. And that is outside the fact that Biden is trying to bribe voters to vote Democratic.
The new wrinkle, and one that’s sure to send politicians scrambling, is how some of those who get their loans “forgiven” may owe state taxes on what effectively becomes income. Again, from Bloomberg:
Residents of New York, Virginia and eleven other states could end up with a surprise tax hit of hundreds of dollars next year on forgiven student loans.
President Joe Biden’s announcement that the government would forgive some student debt for individuals earning less than $125,000 was welcome news to many carrying large loan balances. But 13 states have laws that treat this forgiven debt as income, meaning that it’s subject to state levies on earnings.
This entire episode is a reminder that there’s no such thing as a free lunch.