The talk of the town is regarding Biden’s Student Loan Relief Plan. It is still in the works but here’s a breakdown of what we know so far. This is still a proposal and is not yet finalized.
1. The Department of Education will provide debt cancellation to Pell Grant recipients up to $20,000.
2. The Department of Education will provide debt cancellation to non-Pell Grant recipients up to $10,000.
3. Individuals with income less than $125,000 are eligible to take advantage of this.
a. Married couples with income less than $250,000 are eligible to take advantage of this.
4. You do not have to have graduated with a degree in order to take advantage of the student loan relief.
5. There will be an application process to claim this relief, but it is not yet released. The Department of Education aims to have the application released in October or before the student loan pause ends.
6. The student loan repayment pause has been extended to December 31, 2022.
7. The debt relief will NOT be treated as taxable income for federal purposed, HOWEVER it may be treated as taxable income in Wisconsin.
8. This bill also reduces student loan monthly payments. The Department of Education is looking to reduce monthly payment caps to 5% of the individual’s monthly income for current and future borrowers.
9. This bill also raises the income limit protected from repayment, ensuring no individual earning 225% of the federal poverty level has to make monthly payments.
10. This bill also looks at the Public Service Loan Forgiveness program. The proposal under this bill suggests that borrowers who’ve worked at nonprofit, military, federal, state tribal or local government will receive additional credit towards loan forgiveness.
Samantha Thistle Tax Management & Financial Horizons
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