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Student Loan Forgiveness: What's Next?

by Lawrence Rand | October 22, 2022

Student loan forgiveness has been halted by the courts. On October 21st, a federal appeals court temporarily blocked President Biden’s student debt relief program from moving forward while the court considers a bid for an injunction by six Republican-led states that want the program nixed. While it is unknown when the court will decide the case, it has agreed to an expedited briefing on the motion. In the meantime, the appeals court is instructing the Biden administration to stand down on discharging debt under the relief effort as the administration had prepared to start canceling loans as early as next week.  The pause came after the president said 22 million people had already signed up for the program, and the first loans were expected to be discharged after October 23.  White House press secretary Karine Jean-Pierre said in a statement that the appellate court’s order does not prevent people from applying for debt relief (which you can do HERE), and the administration encourages eligible borrowers to continue to do so.

I filled out the application – what happens next?

In order to qualify for debt relief, borrowers must have earned under $125,000 in income, or $250,000 if they are married, in either 2021 or 2020. After submitting the application, borrowers will receive an email confirmation from the Education Department saying they have received your application and will use the loan and income information it has on file to determine your eligibility and flag any discrepancies.  Borrowers who get flagged may need to submit additional documentation to verify their incomes, but if you don’t get flagged, the department says you probably won’t hear from them until your application has been approved.  Education Secretary Miguel Cardona has said that he hopes to process as many of the applications as possible before the federal student loan payment pause ends on January 1st.

Note: PracticeCFO has sent an email to each client that is eligible based on their 2020 and 2021 tax return with simple instructions to apply for the loan forgiveness.”

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