Things To Know: Student Debt Relief

Tiara Kincaid

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On Wednesday, August 24th, President Joe Biden announced a student loan debt forgiveness program affecting most federal student loan borrowers that took out loans prior to June 30th, 2022. The loan payment pause was also extended until December 31st, 2022. Individuals that received a Pell Grant (an aid for low-income undergraduate students) are eligible for up to $20,000 in relief while borrowers that did not receive a Pell Grant are eligible for up to $10,000 in relief.

You can determine if you received a Pell Grant by either checking with the financial aid office of the college you attended or by reviewing your account at studentaid.gov. If your debt is less than your eligibility amount, you can only receive forgiveness for the remaining balance.

Relief is available for individuals with income below $125,000/year ($250,000/year for married couples) in either year 2020 or 2021.

Affected loans include Direct Stafford Loans, all Direct subsidized and unsubsidized federal student loans, Parent Plus Loans as well as Grad Loans. Federal Perkins Loans held by colleges and all private student loans are not eligible for forgiveness.

Currently, commercially held loans are not eligible for the debt forgiveness program, however, borrowers do have the option to consolidate their loans into the direct loan program, at which point they could qualify to receive debt forgiveness. You can also verify if you have commercial loans by visiting studentaid.gov.

While the forgiveness program may not trigger federal taxes, you may be responsible for state levies. Please speak with your tax professional to find out how this affects your personal taxes.

Before year-end, the Department of Education will release an application to apply for student loan debt relief. You can CLICK HERE to subscribe to their updates. Experts suggest taking a screenshot of your current balances to help ensure you receive your full debt forgiveness.

Important Dates:

  • Early October, 2022: The federal student loan forgiveness application is expected to be released.
  • November 15, 2022: The US Department of Education suggests borrowers to apply for loan forgiveness by this date to receive forgiveness before loan payments resume in 2023.
  • January 1, 2023: Federal student loan payments and interest accrual will resume.
  • December 31, 2023: The current deadline for applying for federal student loan forgiveness.

Please contact us at 404-879-3000 if you have any questions about the program.

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