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Congress·In Committee·13 days ago

Tax-Free Student Loan Repayment for Community Service

Also known as: Workforce Development Through Post-Graduation Scholarships Act of 2026

Legislative Progress

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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.

Milestones

2 milestones2 actions
Feb 17, 2026House

Referred to the House Committee on Ways and Means.

Feb 17, 2026

Introduced in House

Source Information

Document Type

Congressional Bill

Official Title

To amend the Internal Revenue Code of 1986 to exclude certain post-graduation scholarship grants from gross income in the same manner as qualified scholarships to promote economic growth.

Bill NumberHR 7594
Congress119th Congress
ChamberHouse of Representatives
Latest ActionReferred to the House Committee on Ways and Means.

Sponsor

Cosponsors

(1)
D: 1

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