Congress expands student loan tax break for middle-income borrowers
H.R. 7536 — GRADUATE Act · Filed by Dan Goldman (D-NY) · 8 cosponsors · Introduced Feb 12, 2026 · Referred to committee
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What it does
This bill expands the federal tax deduction for student loan payments. Currently, taxpayers can deduct up to $2,500 per year in student loan interest only. The GRADUATE Act allows deduction of payments toward both interest AND principal, and raises the annual cap to $10,000 plus $500 per dependent. The deduction phases out for higher earners ($125,000–$150,000 for single filers; $250,000–$300,000 for joint filers). The benefit flows directly to taxpayers as a reduced tax bill.
Why we flagged it
The bill's sole operative mechanism is a direct expansion of a personal income tax deduction. It increases the annual cap, broadens what payments qualify, and phases out at specified income thresholds—a straightforward tax relief measure for individuals carrying education debt.
What the text implies
- The $500-per-dependent bonus may incentivize higher-income families to claim dependents strategically, though the phase-out limits this effect for very high earners.
- Expansion to principal payments (not just interest) may reduce demand for income-driven repayment plans, which are designed to cap payments for lower-income borrowers—a subtle shift in who bears the cost of student debt.
- The deduction is available only to itemizers or those claiming the standard deduction; the benefit does not accrue to borrowers below the tax-filing threshold, creating a regressive edge despite the phase-out.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
Ordinary taxpayers with student debt receive a direct tax reduction, lowering their annual tax liability and freeing cash for other expenses or debt repayment. The phase-out ensures the benefit concentrates on middle-income earners rather than the wealthy, and the expansion to principal payments (not just interest) meaningfully increases relief for borrowers actively paying down loans.
Who stands to gain
- Individual taxpayers with student loan debt
- Middle-income earners ($125k–$150k single; $250k–$300k joint)
Named in the bill
Internal Revenue Code Section 221, U.S. Department of Education (student loan programs), Individual taxpayers
Where it stands
8 cosponsors: 8 Democrats.
- Feb 12, 2026 — Introduced · Congress.gov: “Introduced in House”
- Feb 12, 2026 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (2,177 characters) on Aug 11, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
As of — page rendered 2026-10-20.
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