The resolution urges Congress to amend the federal tax code to permanently exclude all forms of discharged student loans from federal income taxation. Currently, while certain discharges, such as those for teachers and public service employees or due to death or disability (for discharges occurring between December 31, 2017, and January 1, 2026), are exempt from taxation, other forms of loan forgiveness, such as those under Income-Driven Repayment Plans after 20 or 25 years, are still subject to tax. This creates a financial burden for borrowers who have their loans forgiven but must pay taxes on the forgiven amounts.

The General Assembly of New Jersey believes that eliminating the tax on discharged student loans would significantly benefit borrowers, particularly those in financial distress. The resolution calls for a reassessment of the current tax treatment of discharged student loans and seeks to ensure that all forms of loan forgiveness are exempt from federal income tax, thereby alleviating the financial strain on individuals who have had their student debt discharged. Copies of the resolution will be sent to relevant congressional representatives and federal officials to advocate for this change.