Service corps work brings tax benefit

A: In general, when a debt is discharged, you are taxed on the value of the amount discharged. However, educational loan repayments you receive under this program, or under a state education loan repayment program that is eligible for funds under the Public Health Service Act, are not taxable if you agree to provide primary health services in health professional shortage areas. This exception does not apply if an educational institution cancels your student loan because of services you performed for that institution.