Student Loan Announcement
Last week, the White House announced a new student loan forgiveness program.
This announcement differs significantly from the existing Public Student Loan Forgiveness program (which we previously wrote about here). While there are still several details to come out regarding this program, let’s take a look at the details.
- Any taxpayer with federal student loans may qualify for up to $10,000 of federal student loan forgiveness. At this time, private student loans do not appear to qualify for any type of loan forgiveness.
- A borrower who received a Pell Grant may qualify for up to $20,000 of federal student loan forgiveness.
- In order to qualify, a borrower must have an income below $125,000 for a single filer, or $250,000 for a married filer. At this time, qualification is likely based on 2021 tax returns.
- The other significant announcement is that federal student loan payments will be scheduled to resume in January 2023. These payments have been put on hold since the onset of the pandemic.
- There will likely be some form of application that must be submitted, but that process has not yet been released.
From a financial planning perspective, this forgiveness provides a great opportunity for borrowers who are impacted. In order to maximize the forgiveness, it will be paramount to efficiently use the income difference to add to savings, pay down other debts, or increase giving (or maybe even all three). Don’t hesitate to reach out to one of our planners to determine how you can most efficiently use these additional resources!