We are not rendering, or purporting to render, legal, accounting, or tax guidance. This material is for informational purposes only. Consult with your own legal, accounting, and tax advisors regarding the taxability of the forgiveness of LRAP loans.
LRAPs are designed to discharge student loan debt so that the programs can provide benefits that, in most cases, are not subject to federal income tax pursuant to Section 108(f) of the Internal Revenue Code. LRAP participants who complete the service requirement generally will not have this forgiveness added to their gross income. Section 108(f) of the Internal Revenue Code (IRC) details the requirements for tax-free forgiveness. IRS Publication 970 provides an overview of the treatment of LRAP loan forgiveness.
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