Why Student Loan Forgiveness Can Trigger a Surprise Tax Bill

Episode 26 of Debt Payoff with Fexingo digs into a hidden cost of student loan forgiveness: the federal tax bomb. Lucas explains how forgiven debt is treated as taxable income by the IRS, why Public Service Loan Forgiveness is exempt but Income-Driven Repayment plans are not, and how the American Rescue Plan's temporary tax-free window expires at the end of 2025. Luna shares a real example of a borrower who saved for years but still got hit with a $9,000 tax bill on $50,000 in forgiven debt. The episode covers state-level exceptions (Indiana, Wisconsin, Mississippi), strategies to estimate your potential tax liability, and whether to prepay or wait. It also includes a short, conversational donation segment for listener support. #StudentLoanForgiveness #TaxBomb #IncomeDrivenRepayment #PublicServiceLoanForgiveness #IRS #TaxableIncome #ForgivenDebt #AmericanRescuePlan #StudentLoanTax #BorrowerDefense #LoanForgivenessTax #FinancialPlanning #DebtPayoff #FexingoBusiness #BusinessPodcast #Finance #PersonalFinance #StudentLoans Keep every episode free: buymeacoffee.com/fexingo