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Gov. Whitmer announces student loan relief will not be treated as taxable income

Gov. Whitmer State of the State
Posted at 6:15 PM, Sep 28, 2022

LANSING, Mich. — Gov. Gretchen Whitmer has announced that student loan relief would not be treated as taxable income in Michigan.

About 1.4 million people in Michigan who are eligible for student loan relief will not owe any state taxes for receiving benefits of Public Service Loan Forgiveness or other student loan forgiveness.

The Public Service Loan Forgiveness program is for people who work in public service, including the military, qualifying non-profits, or federal state, local, or tribal governments. Individuals can become eligible after 10 years of public service employment and 120 on-time loan payments.

As of July 2022, about 7,000 people in Michigan have had $406 million in loans forgiven under the Public Service Logan Forgiveness program. More than 147,000 people in Michigan may now be eligible due to the recent Public Service Loan Forgiveness Waiver.

“Tax-free student loan forgiveness could benefit up to 1.4 million Michiganders and help keep money in their pockets,” said Governor Whitmer. “Michigan PSLF recipients who serve their community will not be taxed for any amount of student loan relief they may have received. In Michigan, we value the hard work that all our citizens put in to get the education they need. I will work with anyone to keep lowering the cost of higher education and help students not go into debt in the first place.”

“Our work to open pathways of opportunity for more Michiganders is critical to growing our economy, creating jobs, and building prosperity,” said Lt. Governor Garlin Gilchrist II. “Exempting student loan relief from taxable income builds on the work we have done to boost postsecondary education and skills training in Michigan. Governor Whitmer and I are committed to continuing this work and helping Michiganders access affordable education.”

“I was born in a western Kentucky coal town, daughter of Detroit auto factory workers. It was against the odds that I got my GED, and somehow clawed my way into the Honors College at Western Michigan University,” said Melissa Milton-Pung, a project manager at the Michigan Municipal League and PSLF participant. “I worked hard, held down a student job, became a Presidential Scholar, and got funding for a fellowship in grad school. Regardless of full fellowship funding, I still needed loans to survive, despite working three jobs during that time. My parents had no way of helping me. As the first person in my family to get a bachelor’s degree, then a master’s degree, the decision to go into public service was made easier by the promise of loan relief. It took 17 years for that forgiveness: 10 years of work to qualify, then 7 more years waiting for the program to finally work. I believe in this mission-oriented life and plan to continue to do good work in public service.”