On August 24, 2022, President Biden announced $10,000 of debt relief per federal student loan borrower for those who did not attend college on Pell Grants. He announced $20,000 for those who did attend college on Pell Grants.
The loan forgiveness is for individuals making under $125,000 a year and families making under $250,000 a year. Loans must have been taken out by June 30, 2022.
If you’re a current borrower and a dependent student, you will be eligible for relief based on your parents’ income rather than your own.
Borrowers for whom the Department of Education does not have accurate income information (the majority of borrowers) will need to apply for loan forgiveness. The application should be available by early October. It will take four to six weeks for the forgiveness to appear in a borrower's loan profile, so the government recommends borrowers apply before November 15 to ensure the relief is applied by the time payments resume in January 2023. Sign up at studentaid.gov to be notified when the application opens.
President Biden also extended the pause on student loan repayments that was set to expire on August 31. Payments will begin again in January 2023.
Something getting less attention than it should: If you made student loan payments during the pandemic pause, you can now receive a refund. Simply contact your loan servicer to begin the refund process.
Certain states will be taxing your forgiven loan, be sure to let your accountant know that you had a forgiven loan
Proposed Changes to Income-Driven Repayment Plans
The Department of Education has proposed changes to income-driven repayment plans:
The proposal would cap monthly payments at no more than 5% of your discretionary income, down from 10% now. Remember, discretionary income is the money left after paying taxes and essential cost-of-living expenses.
Athena K. Stone has been with Attentive Investment Managers, Inc. since 2003, is an Investment Advisor and the Chief Compliance Officer for the company. Mrs. Stone earned her Chartered Retirement Planning Counselor (CRPC) designation in 2010 from the College for Financial Planning. She received the designation of Accredited Investment Fiduciary (AIF) from Fi360 in 2011. She earned her Bachelor of Arts Degree in Organizational Leadership from Brandman University in 2012 and her Master of Science in Financial Planning and Designation of MPAS (Master Planner Advanced Studies) from the College for Financial Planning in 2018.
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