Taxability of LRAP Loan Forgiveness
Participants are strongly urged to consult with their tax advisors regarding the taxability of the forgiveness of these loans. Section 108(f) of the Internal Revenue Code (IRC) details the requirements for tax-free forgiveness. Participants who are working for or under the direction of a governmental unit or an organization described in 501(c)(3) of the IRC generally will not have this forgiveness added to their gross income. Please feel free to refer to IRS Publication 970 for an overview of the treatment of LRAP loan forgiveness, as well as the deductibility of student loan interest payments.