The US Department of Education has officially released its application for student loan forgiveness. The short, straightforward application allows borrowers to apply for student loan forgiveness of up to $20,000. Optima Tax Relief gives advice on how to prepare for student loan forgiveness.
Eligible borrowers have till December 31, 2023 to submit their application. Qualified borrowers would include those who hold federal student loans and meet income requirements. Federal student loans include direct Stafford loans, direct subsidized and non-subsidized federal student loans, Parent PLUS loans and GRADE loans.
To qualify for $10,000 in student loan forgiveness, single borrowers must have a gross income (AGI) of less than $125,000 in 2020 or 2021. The maximum household gross income cannot exceed $250,000 to qualify. Those who received Pell Grants while attending school are eligible for up to $20,000 in student loan forgiveness.
The US Department of Education automatically emailed the application to all borrowers who requested to receive updates about student loan forgiveness. If a borrower has not received the email, they can apply online at the Federal Student Aid website. Application is simple with just a few short questions, including full name, Social Security number, date of birth and contact information.
The Education Department may contact applicants for proof of income. Your loan balance is scheduled to reflect in the statement four to six weeks after the application is submitted.
Refunds for Student Loan Payments
Many borrowers took advantage of stalled student loan interest during the pandemic by opting to pay off their balances and proceed on their loans. President Biden’s student loan forgiveness plan allows these individuals to contact their loan providers about a refund for any payments made during the pay break that began in March 2020. The amount paid will be re-added to the loan balance, on which the borrower can proceed. Student loan forgiveness application.
Specific details about this practice are still unclear, so some experts are advising borrowers to put refund requests on hold for now.
tax on student loan loan forgiveness
A handful of states have announced they plan to tax student loan forgiveness as income, including Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin. However, some of these states, including Wisconsin, Minnesota and California, have claimed that they plan to rewrite their state tax codes to make student loan forgiveness exempt from taxation. Borrowers living in these states should keep up to date with the latest information.