I've received a lot of questions about how the new $10,000 - $20,000 student loan debt forgiveness is going to work in real life, so I thought I'd share with you what I know so far:
The student loan debt repayment forbearance from the federal government has been extended until December 31, 2022.
President Biden officially announced student debt relief. Up to $10,000 per household, or up to $20,000 if you received a Pell Grant to attend college.
"How do I know if I received a Pell Grant?" Good article here from CNBC, talking through how to check on that—involves going to studentaid.gov and looking at your account.
Taxpayers with annual income up to $125,000 (not married) or $250,000 (Married Filing Jointly) will qualify for this new relief.
When will this debt forgiveness happen? At this point, it seems extremely likely, although not 1,000% for sure yet, that this relief will start being available for real, in real life, around December of 2022.
It is believed, although not 1,000% known for sure yet, that the government will "automatically" reduce debt amounts for some borrowers, if the government has the necessary info. And then for other borrowers, there will be some kind of application process. (New service you could offer?)
Any student loan forgiveness will be non-taxable on the federal return, maybe taxable though in some states.
Click here to view the full "Fact Sheet" from the White House about new student loan debt relief efforts. In addition to the "headline news" of the forgiveness, there are also some adjustments to repayment requirements that should lower monthly payments for many borrowers.
Remember, this is fast moving and the details are still being worked out. In the meantime, don't hesitate to reach out if we can answer any others questions.