India, Oct. 8 -- Student-loan forgiveness could come with a big tax bill in 2026. Borrowers who qualify to have their student debt forgiven may have to pay federal taxes on the amount that is canceled. A new analysis estimates that the extra cost could be as high as $12,000.

The warning comes from a new report by Protect Borrowers. The student-loan advocacy group released the report Wednesday, showing how the end of a federal tax break could affect borrowers who receive debt relief. Protect Borrowers called the potential cost a "tax bomb", according to Business Insider.

The tax issue comes after a temporary rule expired. A provision created under former President Joe Biden's American Rescue Plan made forgiven student debt exempt from fe...