President Biden has announced debt relief available to a number of student loan borrowers. The relief includes both cancellation of student loan debt and an extension of the payment pause.
- Borrowers Eligible for Relief – Not all borrowers are eligible for Student Loan Debt Cancellation. There are income requirements for this relief.
- Single borrower earns less than $125,000 annually;
- Married couples earn less than $250,000 annually;
- Borrowers’ income eligibility will be determined based upon their 2020 and 2021 Income Tax Returns.
- Student Loan Debt Subject to Cancellation – In addition, not all student loans will be eligible for cancellation.
- Pell Grants Held by the U.S. Department of Education.
- Cancel up to $20,000.
- Non-Pell Grants Held by the U.S. Department of Education.
- Cancel up to $10,000.
- Privately held student loan debt is not eligible for cancellation under this program.
- Pell Grants Held by the U.S. Department of Education.
- Approximately 43 million borrowers will benefit from this targeted Student Loan Debt Relief.
- About 20 million borrowers will have all of their student loans cancelled.
- Application for Student Loan Debt Cancellation
- Eligible borrowers must apply for the debt cancellation relief.
- Unless, the government already has all of the necessary information.
- Approximately, 8 million borrowers will receive relief automatically.
- The government will make an application available to borrowers before student loan payments are due to resume on January 1, 2023.
- Unless, the government already has all of the necessary information.
- Eligible borrowers must apply for the debt cancellation relief.
- Extension of the Student Loan Payment Pause
- The payment pause has been extended through the end of 2022.
- Payments will resume on January 1, 2023.
- The extension will allow for a smooth transition to resuming payments following debt cancellation for eligible borrowers.
- Tax Consequences?
- The IRS will not treat cancelled Student Loan Debt as taxable income!
