Remember Student Loan Forgiveness?
Here’s an update.
President Biden’s announcement on student loan forgiveness a few months ago was revolutionary. While some may have been able to cash in during Octobers beta launch, most people have yet to receive their loan forgiveness, which begs the question: what happened?
Introduction
The cost of higher education today has increased nearly 130% since 1990 after adjusting for inflation. President Biden rolled out his plan for student loan forgiveness back in late August with the idea to wipe nearly $1.6 trillion in debt for millions of borrowers. If you’re like me, you’re wondering, “what happened to the loan forgiveness application that was launched in October?” The program is in a legal battle within state federal courts citing “an unconstitutional exercise of Congress’s legislative power”. Because of the legal tie up in the courts, the application had to be temporarily removed as the issue gets resolved.
As a recap, the plan would eliminate up to $10,000 of debt for borrowers that have an income of less than $125,000 or $250,000 if filing as a couple. If you received a Pell grant, then you may be eligible for up to $20,000 in total forgiveness.
Here are the answers to some of the most asked questions:
What are the next steps to receive loan forgiveness?
You must apply for forgiveness through the application on studentaid.gov before Dec. 31, 2023. Currently the application is unavailable due to legal challenges, but stay tuned to the news for more updates.
What if I have private loans?
Loan forgiveness is only available for federal loans, but you may be able to refinance your rate with Sora. Sign up for a meeting with Sora to see if you should refinance your student loans: https://calendly.com/sora-financial-coaching-session/30min
Is my debt forgiveness tax-exempt?
In the past, debt forgiveness was considered income on taxes. Luckily, this student loan forgiveness is federally-tax exempt.
Is the pause on student loan payments extended?
Yes, there is a pause on payment, interest, and accrual that is extended through the rest of 2022.
Conclusion
What is being done by the administration is unprecedented and so it is normal for there to be legal issues. Stay up to date with Sora as we follow the matter and find out if your private loans can be refinanced using the link above.
