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DFA Statement Regarding Student Loan Forgiveness

  • Posted Date: 09/09/2022
  • Office: All DFA
  • News:

    DFA Statement Regarding Student Loan Forgiveness

    The forgiveness of a debt is generally included in a taxpayer’s gross income. However, the Arkansas General Assembly and Governor Asa Hutchison took action to exempt unemployment payments from state income tax for a two year period. Additionally, PPP loans are not subject to state income tax because of legislation. The General Assembly meets in January and may take similar action to exempt this student debt forgiveness. It would be inaccurate to report student loan forgiveness will be taxable in Arkansas as we won’t be certain until the legislative session is complete and the complete details of the loan forgiveness plan are finalized and announced by the U.S. Department of Education.

    Scott Hardin
    Spokesperson – Arkansas Department of Finance and Administration

    Governor Asa Hutchinson recently issued the following statement regarding student loan forgiveness.
    Broad student loan “forgiveness” is a misuse of executive authority. Shifting the burden from those who willingly took out a loan to all taxpayers isinconsistent with the American ideal of personal responsibility and will further discourage those who took a different path, including work or lower-cost schools.
    If President Biden wanted to provide relief to Americans with student loan debts, he could work to permanently lower interest rates instead of across-the-boardforgiveness. “Forgiving” student loan debts will reward high-cost schools and add to the inflated cost of higher education.