A group of Senate Democrats is urging the Treasury Department and the IRS to take action before a temporary tax break for student loan borrowers expires at the end of the year.

According to a report from Accounting Today, their concern centers on borrowers enrolled in Income-Driven Repayment plans, many of whom are scheduled to receive loan discharges in 2026 after decades of repayment

In a letter to Treasury Secretary and IRS acting commissioner Scott Bessent, Sen. Elizabeth Warren and eight other lawmakers warned that without intervention, borrowers could face large federal tax bills tied to the forgiven debt.

The exclusion Congress enacted in 2021, which ensured loan discharges were not treated as taxable income, is set to lapse in December.

“We write with serious concern regarding Republicans’ impending ‘tax bomb’ for Americans using income-driven-repayment plans,” the senators wrote. They noted that tax bills could reach “as high as $10,000” in many cases unless the administration steps in.

The letter cites research showing that a typical family headed by a borrower receiver IDR cancellation could see its tax liability rise by several thousand dollars, with lower-income households losing access to key credits. 

The lawmakers said Treasury has several administrative options, including existing exclusions in the tax code, to declare IDR discharge nontaxable. They pointed to earlier instances in which similar relief was granted, including during the 2020 closed school discharge actions. 

Their request calls for an immediate response to avoid unexpected tax burdens for borrowers who have long relied on the structure of IDR plans.