Update to exclusion for discharged student loans
Effective January 1, 2018, SB 141 (Ch. 17-71) makes modifications to the language of R&TC §17144.7 to specify the relevant sections in the Code of Federal Regulations that govern the exclusion for discharged student loans:
- 34 CFR §685.206 (Defense to Repayment), subdivision (c), as it read on January 1, 2016, and
- 34 CFR §685.214 (Closed School), subdivision (a), paragraph (1), as it read on January 1, 2016.
R&TC §17144.7, added by SB 150 (Ch. 15-650) in response to the closing of Corinthian Colleges, provides an exclusion from gross income for the amount of student loan forgiveness discharged on or after January 1, 2015, and before January 1, 2020. The exclusion is available for an eligible individual who is granted a discharge of any student loan because the individual could not complete a program of study due to the school closing or because the individual is able to show that the school did something wrong or failed to do something that it should have done.