Senate bill would exclude forgiven student loans from gross income
By The Star Staff
Senate President José Luis Dalmau Santiago said Sunday that he has filed a bill to exclude from gross income the full amount of any student loan debt forgiven by the federal government.
“President Joseph Robinette Biden’s announcement, in addition to representing a relief for our students, promotes economic development,” Dalmau Santiago said in a written statement. “Citizens who benefit from this federal initiative will have fewer financial obligations and greater purchasing power available to invest in other areas of Puerto Rico’s economy.”
Senate Bill 992 establishes that even though the “Puerto Rico Internal Revenue Code” addresses the forgiveness of student loans, the Legislative Assembly considers it necessary to amend the provision so that the forgiveness of such loans is not considered as taxable income.
The proposed amendment to the “Internal Revenue Code of Puerto Rico” proposes that “income derived from the forgiveness of debts, in whole or in part, shall not be subject to a tax on income under this Subtitle, if such forgiveness is due to any of the following cases: the debt forgiven, in whole or in part, is a graduate or undergraduate student loan and is forgiven by the government of the United States of America.”
“The economic situation in Puerto Rico has required that, for decades, thousands of university students have the need to apply for loans to finance their studies,” Dalmau Santiago said. “The debt of these federal loans are recovered immediately, which has caused many of our students to finish their degrees submerged in debt and with little chance of maintaining an income that allows them to meet the payment. This results in long-term economic complications. I urge the House of Representatives and the governor to turn this measure into law to guarantee relief to our professionals.”