Michigan won’t tax canceled student loans

LANSING Michigan (WNEM) – Student loan forgiveness will not be taxed in Michigan.

Governor Gretchen Whitmer made the announcement today.

This will affect anyone who receives the Civil Service Loan Forgiveness Program or other student loan forgiveness.

Whitmer says about 1.4 million Michigan residents are eligible for assistance.

“Michigan PSLF recipients who serve their community will not be taxed for the amount of student loan relief they received,” Whitmer said.

The program that forgives the remaining student loan balance for qualified individuals.

Individuals seeking assistance must work in public service, which includes eligible nonprofit organizations, military, state, local, federal, or tribal governments. They must also have made 120 student loan payments on time with 10 years of service.

New temporary changes to the program make it easier to qualify for debt relief, including allowing for periods of prior payment that previously would not have been eligible.

The temporary changes to the PSLF are scheduled to end on October 31.

Civil service workers are encouraged to apply here.

Generally, the Internal Revenue Service considers debt relief as a source of taxable income.

Any federal loans repaid between 2021 and 2025 will not be considered taxable income by the federal government.

This will also include state tax law, as it aligns with federal law. This temporary relief will also be in effect in Michigan through 2025.

PSLF was created by Congress to help recruit and retain top talent in the public sector workforce.

The U.S. Department of Education is offering public servants working in government and eligible nonprofits a second chance for student loan forgiveness through October 31.

To apply for the PSLF waiver, borrowers must:

  • Visit PSLF Employer Search to verify that their employer is eligible for PSLF.
  • Submit a certified copy of the PSLF certification form to the US Department of Education by October 31.

If borrowers have questions about their personal circumstances, they can visit or call FedLoan Servicing at 1-855-265-4038.

About Judith J. George

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