Earlier this month, President Joe Biden announced a new student debt relief plan that will grant millions of federal student loan borrowers up to $20,000 in debt forgiveness. The application for student debt forgiveness is expected to be available by early October. (Register for Federal Student Loan Borrower Updates on the U.S. Department of Education website.) After submitting the application, eligible students can expect the student loan relief within four to six weeks. For the 8 million borrowers whose income information is already known to the federal government, debt relief should be automatic.
Recipients of federal student debt relief will not have to pay federal income tax on the amount forgiven. However, some borrowers may still be responsible for state income tax, depending on the state. Finally, if borrowers made student loan payments during the pandemic loan payment pause, which began on March 13, 2020 and runs through December 31, 2022, they may request a refund by contacting their loan servicer.
For additional details and helpful explainers on the Biden-Harris Student Debt Relief Plan, visit the links below.