2 questions about student loan forgiveness

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Will he need to claim the $6000 as income on his tax return?

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Don't think so.

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Will the forgiven loan somehow affect his credit?

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Yes. Would impact it in the same way it would if he sent in a 6000 payment.

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1. Will he need to claim the $6000 as income on his tax return?

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Generally, no. He isn't receiving that as income nor is he even acting as a passthrough, his debt is simply being forgiven. I don't think the specifics have come out yet, but I simply can't see the current (or any) administration forgiving large loan amounts and then telling the IRS to classify it as taxable income.

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2. Will the forgiven loan somehow negatively affect his credit?

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Quite the opposite, he will appear to have paid his loan off quite early (many years ago I think such an early payoff may have been reported negatively though).

It depends on the mechanics.

If the government is paying the loan, then it isn't forgiven. It is paid as agreed (by a different payor).

If there is "forgiveness" on the debt, it generally shows forbearance on the credit report and negatively effects the credit.

And "forgiveness" of a debt is generally taxable income (and an expense write off for the bank).

I have no clue how this is structured. But the media and people rarely use words to their proper meaning.

Here is the website they set up to provide info on the program LINK

Enter the 87,000 new IRS agents to collect!

Don't count your chickens before they hatch. I've heard this may get shot down in court.

The President cannot waive his wand via EO and spend the funds in the Treasury, it's not a power of the executive branch. Unless Biden proposes a bill to Congress, nothing will get done. (He's not doing that because it's so unpopular and it wouldn't pass if he did propose a bill.)

Like the CDC moratorium on rent, it's completely unconstitutional. I think Biden's plan is to get loan forgiveness via executive order struck down by Supreme Court intentionally so he can have momentum to pack the court by 2024.

Plus, actually spending money to forgive loans ruins any future support from those who would support this lunacy anyway, but the promise of forgiveness keeps borrowers voting for Democrats indefinitely.

There are no timelines on that website beyond Step 1 for a reason!

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This only involves student loans that the federal government owns.

It simply makes an accounting entry.

Debit Loss Due to Forgiveness for 300B
Credit Student Loan Receivables for 300B.

To the extent the fedgov has any actual admin costs of the program... it will simply come out of the budget of the Dept of Education.

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This was what I was going to bring up. I'm not sure all of the mechanics of this so I'm really not sure, but me telling you I don't have to pay me back isn't the same thing as me paying you money.

We'll see if he's able to do it or not, but it's not a cash outflow as much as it's an accounting entry to "bad debt" for lack of a better term

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Loan forgiveness is typically taxable but we shall see. Just Google “Loan Forgiveness IRS”.

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Although this is true generally, I had my loans forgiven under the Public Service Loan Forgiveness program last year; the IRS put out specific guidance for this program that said it would not be considered a taxable event (and I received forgiveness of a lot bigger balance than $10k so thank God). I can't imagine they would handle this any differently, since they're both federal student loan forgiveness programs.

That being said, never underestimate the government's ability to screw something up.

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Seems like political suicide to waive such a big carrot if you know you have no chance of actually doing it.

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The only value of loan forgiveness is dangling the carrot out there indefinitely to keep your base engaged in the short term and/or achieve a larger goal (packing the Court in 2022-2024 so governing via Executive Orders can succeed in the future).

Biden is a 1-term illegitimate president and Dems will struggle to win future elections, so jamming through as many liberal wishes as possible (with no regard for the Constitution) is the overriding goal of the administration.

Those who benefit are mostly wealthier, white college-educated liberals who would vote Democrat anyway, who are also the Dems' only hope to stem a likely midterm bloodbath.

The $10,000 won't really affect those who'd benefit from the forgiveness but securing their motivation for 2022 and 2024 is greater, plus the long term pushback from actually succeeding would be far worse. Even Pelosi acknowledged pushing this would be difficult and unpopular.