Workforce Development Through Post-Graduation Scholarships Act of 2026

Key Points

• This bill would change tax laws so that certain grants used to pay off student loans are not counted as taxable income. Currently, if a charity pays off part of your student loan, the IRS often treats that money as income, meaning you might owe taxes on it even though you never saw the cash.
• To qualify for this tax break, the money must come from a non-profit foundation or community trust. The graduate must also live and work in a community where the number of people with college degrees is lower than the state or national average.
• The goal of this policy is to help rural and underserved towns attract skilled workers. By making these grants tax-free, it becomes much more affordable for graduates to move to these areas and help grow the local economy.
• The grant money must be paid directly to the company holding the student loan. This ensures the funds are used only for debt relief and provides a clear trail for the government to verify the money was used correctly.
• There is a rule to prevent a 'double benefit.' If a person receives this tax-free help, they cannot also claim a tax deduction for the interest paid on that same portion of the loan during tax season.

Impact Analysis

Govbase has not yet run an impact analysis on this legislation.