This is going to be short post because we do not have the details yet. President Biden announced on August 24th that he is authorizing $10K of student loan forgiveness.
Here’s what we know:
To qualify for this forgiveness:
- Income must be less than $125Kfor Singles or $250K for Head of Household or Married Filing Joint
- We aren’t sure how they will define income—wages or adjusted gross income based on which tax year?
- Must be FEDERAL loans—if you refinanced into a private loan, unfortunately this doesn’t count
- There may be an additional $10K of forgiveness if you qualified for the Pell Grant
What we don’t know(the details!):
- What year will this income threshold be based on?
- The mechanics of getting this done—form, apply online, timeframe, etc.?
- Will this forgiveness be taxable? Most loans that are forgiven are considered taxable. Currently the Public Service Loan Forgiveness program is not taxable.
- If you have multiple loans, can you choose the one with the highest interest rate?
As soon as the details are worked out and more information becomes available, we will be sure to post another update so stay tuned.
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