Good Afternoon,
I am sure by now a lot of you have seen the news on Student Loan forgiveness and I am sure you have a lot of questions. We will continue to update as we learn more.
Here is a summary of what we know right now.
#1 There will be one final extension on the student loan repayment pause. The pause has been extended until December 31, 2022. Which means minimum payments will be restarted in January 2023. Please make sure to follow up with your loan holder before the payments restart.
#2 Eligible loan holders may be eligible for either the remaining balance of their Federal Student Loan or $10,000 (whichever is the lesser amount). If a loan holder received a Pell Grant, they may be qualified for up to $20,000.
If you owe more than $10,000 (no Pell Grant) or $20,000 (with a Pell Grant) only this amount will come off your loan and repayments will start in January 2023.
If you owe less than the $10,000/$20,000 amounts only the remaining balance will be paid off. You will not receive the difference.
To be eligible you must have income under $125,000 (individual) $250,000 (married filing joint).
**Still waiting on more information on how to apply for the forgiveness**
#3 If you have been making payments from March 13, 2020, to August 2022. You should be able to request a refund of any payments made. If your balance will stay below the $10,000 or $20,000 amount you may want to connect your loan holder. There will be more information coming on this soon.
#4 The forgiveness of the student loan will not create a federal tax liability. But depending on which State you live in you may have tax liability. In Oregon they will follow federal tax law and will not tax Oregon residents on student loan forgiveness.
#5 Lastly, there are some additional changes that are going to be made to future student loans and repayments. More on that later.
If you want to read more here is the direct link to the Debt Relief Announcement
I would also suggest that you stay up to date by subscripting to US Department of Education for all the latest updates.