Section 1 Short title
This Act may be cited as the “Student Debt Repayment Fairness Act”.
Student Debt Repayment Fairness Act
A BILL
To amend the Internal Revenue Code of 1986 to allow without penalty any 529 plan distributions used for student loan payments.
Sec. 2 Student loan payments from qualified tuition plans not subject to penalty tax
by inserting “(A) In general.—” before “The tax” and moving the text 2 ems to the right; and
by adding at the end the following:
“(B) Student loans
“(i) In general—Subparagraph (A) shall not apply to any payment or distribution in any taxable year which is includible in gross income and is used to pay principal or interest on indebtedness incurred solely to pay qualified higher education expenses of the designated beneficiary or member of the family of the designated beneficiary which are attributable to education furnished during a period during which the beneficiary or family member was a student at the institution providing such education.
“(ii) Refinanced loans—For purposes of clause (i), the term “indebtedness” includes indebtedness used to refinance indebtedness described in clause (i).”
Effective date— The amendment made by subsection (a) shall apply to payments made in taxable years beginning after December 31, 2016.