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For now, it remains to be seen how Congress or the new Biden administration will help student loan borrowers contend with taxes stemming from debt forgiveness.

A possibility could be for the forgiveness to be part of a Covid-19 stimulus program, said Brooks. Perhaps it could be deemed a “qualified disaster relief payment” that’s excluded from gross income, he said.

Congress could also draft legislation that ensures only borrowers below a certain adjusted gross income receive tax-free forgiveness, said Leandra Lederman, director of the tax program at the Indiana University Maurer School of Law.

“You could do that here,” she said. “Exclude from income up to $50,000 of cancellation of indebtedness if the adjusted gross income is under a certain level and then phase it out.”

How Washington develops a solution for the taxes could come down to how they roll out the relief in the first place.

“There have been arguments back and forth that if this were done by executive order rather than through legislation, it’s hard to see how that would not be subject to tax liability,” said Kim Rueben, director of the State and Local Finance Initiative at the Urban-Brookings Tax Policy Center.

“If it’s subject to tax liability, then it’s really bad policy right now,” she said. “The people who are going to do well are the ones who can afford the tax debt, but those who are struggling?”

“You’re replacing student loan debt with owing the IRS, and it doesn’t feel like a good exchange,” Rueben said.