CHARLOTTE (QUEEN CITY NEWS) – In all the news about student loan forgiveness, there are people with a ton of questions, mainly involving whether they qualify and how much they would qualify for.

But in North Carolina, there’s an additional question on whether those who receive the forgiveness will be taxed. For now, that answer is yes.

“I feel like it kind of defeats the purpose,” said Layne Groscost, who still owes money on her student loans.

The North Carolina Dept. of Revenue said federally, the forgiveness won’t be taxed because of changes made to the tax code as part of the American Rescue Plan. 

However, the department noted that the General Assembly did not fully pass the tax code to cover state revenues, which means that student loan forgiveness will be taxed.

MORE: South Carolina won’t tax forgiven student loan debt

“The state has a massive budget surplus,” said State Senator Natasha Marcus, a Democrat serving Mecklenburg County. “It’s over $6 billion last time I checked.”

State Senator Marcus said, when the General Assembly comes back in session, this should be taken up.

“If you have student debt, it is an indication that you do not have generational wealth,” said Marcus. “Your family is not wealthy enough to send you to college without taking out loans.”

State Republicans, however, are not keen on taking the tax out. In a statement Tuesday to Queen City News, a spokesperson for State Senator Phil Berger said, “The North Carolina Legislature has been focused on general tax reduction and avoiding policies designed to politically pick winners and losers. At the same time, we have advanced ways to make college more affordable and provide relief from the Biden economy’s inflation that continues to cost all North Carolinians. Our law is long settled that debt forgiveness is a taxable event, whether that forgiveness is from a debt obligation owed to the government for an educational loan or a debt obligation owed to a private lender for a home or consumer loan. To change the law for one type of debt would be the height of unfairness to all others.”

North Carolina is one of a handful of states where student loan forgiveness is being taxed.

Student loan experts said this may actually force some people to forego the opportunity.

“I’ve heard from at least a dozen borrowers who live in states that appear to be getting ready to tax this forgiveness,” said Betsy Mayotte with “They want to forego it because it will make them lose need-based benefits they receive.”

For Groscost, she said she may still apply, despite the hit.

“I’d rather take it being taxed than not have it at all,” she said.