Hertzberg Bill to Lift Taxes on Forgiven Student Debt

California State Sen. Bob Hertzberg will introduce a bill to lift state income taxes on newly forgivable student loan debt, the Van Nuys Democrat announced Tuesday. The bill would ease the financial burden of nearly 3,000 California students — including 500 in the Valley — who attended Brightwood College, which closed earlier this month. Following a federal judge’s ruling, the Department of Education announced last week that it will wipe out $150 million owed by students who attended for-profit colleges such as Brightwood that went bankrupt or were forced to close after losing accreditation. Debt forgiveness, however, is classified as income by the IRS, leaving students on the hook for state and federal taxes. “When a for-profit college closes suddenly because of mismanagement and accreditation issues, it can leave students in financial ruin,” Hertzberg said in a statement. “After paying tens of thousands of dollars for a partial education, they often have nothing to show for it. This is too big of a problem to ignore.” Brightwood had 32 campuses across the U.S., including one at 15400 Sherman Way in Van Nuys. It offered associate degrees and certifications in nursing and related medical careers.