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Publication 970

Chapter 5
Student Loan Cancellations and Repayment Assistance(p38)

What’s New(p38)

Student loan discharged due to death or disability.(p38)
If a student loan (including a private education loan) is discharged after December 31, 2017, on account of the student’s death or disability, you may not have to include any amount in income.


Generally, if you are responsible for making loan payments, and the loan is canceled or repaid by someone else, you must include the amount that was canceled or paid on your behalf in your gross income for tax purposes. However, in certain circumstances, you may be able to exclude amounts from gross income as a result of:

Student Loan Cancellation(p38)

If your student loan is canceled in part or in whole in 2018, you may not have to include the canceled debt in your income. To exclude canceled student loan debt from your income, your loan must have been made by a qualified lender to assist you in attending an eligible educational institution. In addition, the cancellation must be due to death or permanent and total disability or pursuant to a provision in the loan that all or part of the debt will be canceled if you work:
The cancellation of your loan won't qualify for tax-free treatment if it is canceled because of services you performed for the educational institution that made the loan or other organization that provided the funds. See Exception, later.

Eligible educational institution.(p38)

This is an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities.

Qualified lenders.(p38)

These include the following.
  1. The United States, or an instrumentality or agency thereof.
  2. A state, territory, or possession of the United States; or the District of Columbia; or any political subdivision thereof.
  3. A public benefit corporation that is tax exempt under section 501(c)(3); and that has assumed control of a state, county, or municipal hospital; and whose employees are considered public employees under state law.
  4. An eligible educational institution, if the loan is made:
    1. As part of an agreement with an entity described in (1), (2), or (3) under which the funds to make the loan were provided to the educational institution; or
    2. Under a program of the educational institution that is designed to encourage its students to serve in occupations with unmet needs or in areas with unmet needs where the services provided by the students (or former students) are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization.
  5. In addition to (1)–(4) above, for loans canceled on account of the death or total and permanent disability of the student only, the lender of a private education loan (as defined in section 140(7) of the Consumer Credit Protection Act).
Section 501(c)(3) organization.(p38)
This is any corporation, community chest, fund, or foundation organized and operated exclusively for one or more of the following purposes.


In most cases, the cancellation of a student loan made by an educational institution because of services you performed for that institution or another organization that provided the funds for the loan must be included in gross income on your tax return.

Refinanced loan.(p39)

If you refinanced a student loan with another loan from an eligible educational institution or a tax-exempt organization, that loan may also be considered as made by a qualified lender. The refinanced loan is considered made by a qualified lender if it is made under a program of the refinancing organization that is designed to encourage students to serve in occupations with unmet needs or in areas with unmet needs where the services required of the students are for or under the direction of a governmental unit or a tax-exempt section 501(c)(3) organization.