As most know, the updated student loan news was announced recently. There is a lot of new information out there. We have done our best to unpack the information in a way that is easy to understand. This article will outline the updates made to COVID forbearance and the student loan forgiveness granted recently:
What is making headlines is the one-time forgiveness aspect of this announcement. $10,000 of federal loans will be forgiven, plus another $10,000, if you received a Pell Grant (so a max of $20,000 is possible).
Do I qualify?
To qualify your “income” has to be $250,000/yr. or less for married filing joint, or $125,000/yr. for single filers. It is important to note that the income threshold can be met in either 2020 or 2021. If you are under the amount in either year (just one will work), you qualify.
Which loans qualify?
All federal loans should qualify, including Parent PLUS loans. Private loans do not qualify.
How do I get the loans forgiven?
Most borrowers shouldn’t need to “do” anything to get their forgiveness. That being said, ensure that all your relevant data is on file.
Important Note: Like all other forms of forgiveness now, this is a non-taxable event at the federal level.
Forbearance has been extended, one more time. No payments will be required, and no interest will be charged through December 31, 2022. Payments will resume in January 2023. They made sure to note that this is the final extension - something they have not said at any point before.
It was also announced that there is a new Income Driven Repayment plan that is going to be implemented, but the details of this plan have not been announced at this time.
These updates to COVID Forbearance and the One-Time Forgiveness will greatly affect many people with student loans. Understanding these updates and planning for how they may affect student repayment strategies is vital for each person. When it comes to student loans, having a plan for repayment is crucial to ensure that one is taking advantage of all of the programs available to them.
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