The Income-Based Repayment Plan does not provide enough incentive to repay student low debt and will potentially end up costing the government millions in forgiven debt. The current Student Loan Interest Deduction is not sufficient anymore as many pay much more interest annually than the $2500 available deduction and the equivalent tax benefit is not enough.
Providing an Adjustment to Income will result in only a few thousand dollar tax benefit for many, however, this reduction in tax liability will not only provide incentive to pay loans back that is more quantifiable but also provide the taxpayer more expendable funds to put back into the economy. Overall the tax revenue lost by providing this deduction will be much less than the potential loss from forgiving student loans.