New Jersey Bill Would Provide Student Loan Debt Tax Relief
A new bill (A5304) has been introduced that would provide student loan tax relief to New Jersey borrowers and cosigners. The bill, which is sponsored by Assemblymen Gary Schaer (D-36) and Daniel Benson (D-14), was written by NJCPA Student Loan Debt Task Force co-chairs Melissa Dardani, CPA, and Zachary Cohen, CPA.
Below is a summary of the bill:
This bill provides tax relief to cosigners and borrowers of student loans under the New Jersey College Loans to Assist State Students (NJCLASS) Loan Program.
Specifically, under the bill, the Higher Education Student Assistance Authority (HESAA) is required to permit a cosigner to a student loan in repayment status under the NJCLASS Loan Program to make payments on the loan in amounts to be determined by the cosigner. Payments made by a cosigner would be made voluntarily and in addition to any other amounts paid by the borrower of the loan.
A cosigner making voluntary payments authorized under the bill would be eligible for a tax deduction. A taxpayer with gross income of $80,000 or less would be allowed to deduct an amount equal to the full amount of the taxpayer’s payments on the NJCLASS loan. A taxpayer with gross income of more than $80,000 would be allowed to deduct an amount equal to 50 percent of the payments.
In addition, the bill would allow a taxpayer with gross income of $80,000 or less, who is the borrower of a student loan under the NJCLASS Loan Program, to deduct from gross income an amount equal to the interest paid on the student loan during the taxable year. A taxpayer with gross income of more than $80,000 would be allowed to deduct an amount equal to 50 percent of the interest paid on the student loan during the taxable year.