People who benefit from student loan forgiveness may be wondering about the tax consequences of this debt relief option, including a potential "student loan tax bomb." There are several situations that can lead to a borrower facing this situation, and some ways to prevent it.RELATED: Student loan forgiveness: What to know about the SAVE planHere’s what to know if you received student loan forgiveness or could in the future.
Lastly, borrowers should consider their state-level taxation implications of forgiven student loans. "Despite the federal exemption, some states may treat forgiven student loan debt as taxable income, with policies varying significantly across the country," Samaniego told FOX Television Stations. "Borrowers should stay informed about their state's stance on this issue to fully understand the potential tax implications of loan forgiveness," he added.