[This story has been updated with information from Blumenthal’s office]
U.S. Sen. Richard Blumenthal today called for expanded eligibility and less burdensome tax rules for student loan forgiveness programs launched a year ago.
Blumenthal wants Congress to build on the U.S. Department of Education’s Pay As You Earn program, which caps loan repayment at 10 percent of discretionary income, forgiving the balance entirely after 20 years. The program is only open to students who borrowed after 2007. Blumenthal wants to make more students eligible.
He also wants a change to the tax code so that forgiven loans would no longer be counted as taxable income, which he said results in prohibitive tax bills due immediately.
The senator also called today for more leeway for student debtors who go into public service professions.
Along with Sen. Elizabeth Warren, D-Mass., Blumenthal co-sponsored the The Bank on Student Loan Fairness Act, which would have allowed students to take advantage of the same interest rates offered to banks through the Federal Reserve discount window, currently at 0.75 percent. The Senate approved the bill last week.
