Student loan debt may be discharged after 25 years under the Income Based Repayment program. Currently, the IRS requires that this discharged debt be reported as taxable income. The end result of this is that people with large student loan debt (particularly medical and legal professionals) are required to make a large payment to the IRS once the debt is discharged.
The issue with this is that many of these people are in public sector jobs, and are already making less than their counterparts in the private sector. The current IRS rules punish them for this, and discourages people from taking low-paying but societally necessary jobs. It defeats the purpose of the IBR program
Two suggestions: 1) Reclassify it as nontaxable or 2) Put a maximum cap on the amount of discharged taxable debt