In this article, we will let you know about USA President Joe Biden’s Student Loan Debt Forgiveness Programme updates.
President Joe Biden announced to provide up to $20,000 in debt relief to Pell Grant recipients with loans held by the Department of Education.
And up to $10,000 in debt relief to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.
Student Loan Forgiveness Latest Update
President Biden said that despite the ongoing legal battle, borrowers will begin to receive student loan forgiveness one-time cancellation initiative within two weeks.
How to apply for student loan forgiveness application 2022?
The student loan forgiveness formal application is live and available online. It takes only 5 minutes to fill up the application form.
No login and documents are required for this. You should apply for your student loan debt relief application today itself and no later than 31 Dec 2023.
Eligible borrowers can get a full or partial discharge of loans up to $20,000.
For those who can’t apply online, a paper version of the form will be available soon by the end of 2023 to apply.
You can apply only if you have loan balances before June 30, 2022. The new loans disbursed on or after July 1, 2022, are not eligible for debt relief.
The lawsuit against student loan debt forgiveness
Six Republican-led states filed lawsuits in an effort to block the student loan forgiveness plan from taking effect.
The lawsuit was filed in a federal court in Missouri by state attorneys general from Missouri, Arkansas, Kansas, Nebraska and South Carolina, and Iowa.
The court has given a stay order to the Biden administration and instructed them not to act on the programmme while it considers the appeal.
Consequently, the student debt relief application is open for students and you can apply if you are eligible, but debt discharge is paused due to court orders.
The administration will continue to review applications. The Biden administration also said that they will quickly process discharges, once they get clearance from the court. You will not need to reapply.
Who qualifies for student loan forgiveness?
- You are eligible If your annual income is below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
- If you had received a Pell Grant in college and meet the income threshold, you will be eligible for debt relief up to $20,000.
- If you had not received a Pell Grant in college and meet the income threshold, you will be eligible for debt relief of up to $10,000.
- “As of Sept. 29, 2022, borrowers with federal student loans not held by the U.S. Department of Education cannot obtain one-time debt relief by consolidating those loans into Direct Loans,”
- “Consolidation loans comprised of any FFEL or Perkins loans not held by the Education Department are also eligible if the borrower applied for consolidation before Sept. 29, 2022.
- All subsidized and unsubsidized loans, parent PLUS loans, and graduate PLUS loans held by ED are eligible for debt relief.
- Consolidation loans that were ED-held loans and disbursed on or before June 30, 2022, are also eligible for debt relief.
Private loans (i.e., non-federal loans) are not eligible for debt relief.
Loans Eligible for Student Debt Relief
The following types of federal student loans disbursed on or before June 30, 2022, are eligible for debt relief:
- William D. Ford Federal Direct Loan (Direct Loan) Program loans
- Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency
- Federal Perkins Loan Program loans held by ED
- Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, graduate PLUS; and Perkins loans held by ED)
Is student loan forgiveness taxable?
Forgiven student loans aren’t taxable. A provision in the 2021 American Rescue Plan Act exempted student loan forgiveness from taxation until 2025.
However, in some states, you may be required to pay state income tax on canceled student loan debt.
State taxing student loan forgiveness
North Carolina, Mississippi, and Indiana are the states that want to tax student loans, despite them being forgiven.
Most states have already declared they will not tax students on federal student loans forgiven. The list of states not taxing student loans is mentioned below:-
- New Hampshire
- New Mexico
- New York
- Rhode Island
- South Dakota
- Washington, DC
How to Find Do I have Pell Grant – Must Read
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