Cooper asks NC General Assembly to not tax student loan forgiveness

Gov. Roy Cooper asked the N.C. General Assembly on Wednesday to not tax the student loans forgiven by the Biden administration as income.

Why it matters: Just a handful of states are likely to tax forgiven student loans, including North Carolina, according to an analysis by the Tax Foundation. And the forgiven loans are not considered taxable income for federal tax purposes.

• Some borrowers might have to pay hundreds of dollars in taxes on the loans they were forgiven.
• Under the Biden plan, borrowers who make less than $125,000 individually ($250,000 for married couples) were eligible for $10,000 in student loan forgiveness. Those who received Pell Grants were eligible for up to $20,000 in forgiveness.

What they're saying: Cooper said in a release that the General Assembly should treat the forgiven student loans in the same way it did forgiven Paycheck Protection Program loans, which were given to many businesses during the COVID-19 pandemic.

• "Republican legislators were quick to help businesses and should now fix this fundamental unfairness for many hardworking people who will get hit hard by this," Cooper said in the statement.

Asked in an interview last Friday whether the legislature plans to address the issue, N.C. House Speaker Tim Moore said Republican legislative leaders have yet to discuss it.

• It's unclear whether the General Assembly will hold votes on legislation in the remainder of the year, or if it will hold off on any policy changes until next year's session.

"When it comes to deductibility for income taxes, I generally like to see us — where we can — be coupled with the federal government," Moore said.