"The Biden Administration recently announced that it plans to cancel up to $20,000 in federal student loan debt, which is likely to affect many of the nearly 43 million Americans who borrowed to attend college," U.S. News & World Report writes.
... "Current students and borrowers who have federally held undergraduate, graduate and Parent PLUS loans that were distributed on or before June 30, 2022 are eligible for the relief, says Megan Walter, a policy analyst for the National Association of Student Financial Aid Administrators."
"Walter says the Department of Education may have the necessary data for borrowers based on information submitted for income-driven repayment plans or for the Free Application for Federal Student Aid, known as FAFSA."
"For current students, the Department of Education will have income data for any borrowers who completed the FAFSA in 2021-2022, Walter says. For borrowers who were a dependent during the 2021-2022 school year, the Department of Education will use parental income information to calculate loan cancellation eligibility."
"The Department of Education hasn't indicated that it will reimburse borrowers for payments made during the pandemic pause, Walter says."
"While debt forgiveness is ordinarily taxable income, it will not be counted toward federal income taxes as part of the Biden Administration's plan. The American Rescue Plan Act of 2021 allows canceled student loan debt to be federally tax-free through 2025, Walter says. However, in some states, borrowers could potentially have to pay state income tax on the amount of forgiveness they receive."
NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.
Publication Date: 9/1/2022