India, Oct. 8 -- Millions of American student loan borrowers who anticipate having their remaining debt forgiven under federal income-driven repayment plans are facing an impending financial hurdle, according to a comprehensive new analysis released by the advocacy organisation Protect Borrowers.

The report reveals that the expiration of a crucial federal tax exemption at the close of 2025 has reinstated the notorious student loan tax bomb, a mechanism whereby the Internal Revenue Service treats cancelled loan balances as taxable gross income.

With up to 3.2 million borrowers potentially caught in the regulatory shift, consumer protection groups and financial planners are sounding the alarm over surprise tax bills that could reach thous...