Student Loan Forgiveness: What You Need to Know
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President Biden announced a plan to move forward with canceling thousands in federal student loan debt, plus an extension on the student loan payment pause. While this announcement brings many Americans a financial sigh of relief, it also prompts questions. Let’s break down what this update means for you and your family.
Are you eligible for student loan forgiveness?
You are generally eligible if:
- You make less than $125,000 per year.
- You are married with a household income that is less than $250,000.
- You have any federal student loan held by the Education Department (private loans are not eligible).
Federal parent PLUS loans and graduate student PLUS loans also qualify for forgiveness. Learn more about eligibility.
How much debt will be forgiven?
If you received the Pell Grant, you could get up to $20,000 in forgiveness. Other borrowers can get up to $10,000 in forgiveness.
What should you do to receive the forgiveness?
According to the Education Department, an application will be available before the end of the year. For now, you can:
- Sign up for updates about the application process at www.ed.gov/subscriptions.
- Let your loan servicer know how to get in contact with you to receive guidance and instructions.
- Talk to your LegalShield lawyer to clarify your rights and any to-do items.
Will the loan forgiveness generate taxes?
The loan forgiveness plan will not trigger federal taxes, but it’s possible you may still have to pay state levies. Ask your LegalShield lawyer before filing your state tax return to be sure.
What is the update on the payment pause?
The payment pause, which was initiated during the COVID-19 pandemic in March 2020, will now continue through December 31, 2022. President Biden announced this will be the last time the pause will be extended, and payments will resume in January.
How can your LegalShield lawyer help with student loan forgiveness?
Having legal support when going through a new process can be invaluable. Here are a few ways your LegalShield lawyer can assist you:
- Provide consultation on your state-specific rights.
- Help you navigate your eligibility and next steps.
- Break down confusing legal jargon in applications.
- Help you handle legal questions that come up through the process.
Learn more about your student loan forgiveness rights.
For more information and FAQs on federal student loan forgiveness, go to studentaid.gov. To get answers to your specific questions about eligibility and the application process, schedule a consultation with your LegalShield lawyer.