Due to President Joseph Biden’s recent announcement, student loans and student loan forgiveness are a topic of discussion in most homes.
A student loan forgiveness program has been introduced. The majority of loans canceled in the past have been for people working in the public service and nonprofit sectors. To be eligible for Public Service Loan Forgiveness (PSLF), you must be employed by a U.S. federal, state, local, or tribal government or nonprofit organization (federal service includes U.S. military service); work full-time for that agency or organization; have direct loans (or consolidate other federal student loans into one direct loan); repay your loans under an income-driven repayment plan; and make 120 qualifying payments.
Until October 31, 2022, borrowers can receive credit for payments that were previously not eligible for PSLF or Temporary Expanded PSFL (TEPSLF). Be sure to go to studentaid.gov to determine if you qualify and complete the necessary certification and application. To ensure you are on the right track, you must submit a PSLF & TEPSLF certification and application each year or when you change employers.
Currently, the U.S. Department of Education says a simple Federal Student Loan Forgiveness Application will be available in early October. Borrowers must complete this application by November 15 to receive relief before the final payment break extension ends on December 31.
Many borrowers will automatically be covered because their relevant income data is already available to the Department of Education. The Department of Education notes that it will continue to process federal student loan forgiveness applications as they are received, even after the payment pause expires on Dec. 31.
President Biden announced on August 24 his intention to give borrowers an additional four months to prepare to resume their payments. The extended pause occurs automatically — no action is required. But you’d want to apply for federal student loan forgiveness — if you qualify — as soon as possible. Private student loans are not covered.
Income limits apply – an individual’s income must be less than $125,000 or less than $250,000 for married couples to qualify. And most people will have to fill out applications.
You will want to check your details with your loan officer and on StudentAid.gov. You can visit StudentAid.gov/DebtRelief to follow what is likely to be a complex process involving the cancellation of a student loan.
Up to $10,000 in federal student debt will be forgiven if you didn’t have a Pell grant while in college or graduate school. But up to $20,000 in federal student loans can be forgiven if you had a Pell grant in college.
This also includes Parent Plus loans – if parents meet income limits. If the loans are already in the Direct Loans program and the parent made payments on them during the pandemic, parents should request a refund from the loans manager if the payments have brought the loan balance below the 10 cap. $000 or $20,000, as the case may be.
Most people who qualified for the moratorium on student loan repayments took advantage of it and didn’t make all their payments for more than two years. It is now possible to get student loan forgiveness on payments made since March 2020, if you have paid off all of your debt. You will want to contact your loan officer to request a refund so that you can apply for federal student loan forgiveness to cover this debt.
Debt relief under this new limited program will not be included in your taxable income on your federal tax return. But some states, except Michigan, will treat debt cancellation as taxable income.
Take advantage of Michigan College Planning’s college planning workshops to learn more about how to reduce stress, save time, and potentially money during the college planning process. Visit www.michigancollegeplanning.com Where https://www.tcaps.net/programs/leap/for places and dates. The workshops are informative and include steps you can take right now to make sure you understand the cost of attending and how you can afford to go to college. If you cannot attend a workshop, please call Michigan College Planning with your questions.