Through the Relief Act, borrowers will not be responsible for paying federal taxes on their forgiven student loan debt from 2021 to 2025. This has primarily benefited borrowers who are enrolled in income-driven repayment programs, as they are no longer required to report their forgiven amounts as taxable income.
The $1.9 trillion coronavirus relief package signed by Biden on March 11 includes a provision that makes any student loan debt forgiveness tax free from December 2020 through Dec. 31, 2025.
Public Service Loan Forgiveness
PSLF forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.
If you default on a federal student loan, your tax refunds can be taken to help cover what you owe. However, the government has paused this program and other collection activities through Sept. 30, 2021, due to the pandemic.
Your responsibility to pay student loans doesn't go away after 7 years. But if it's been more than 7.5 years since you made a payment on your student loan debt, the debt and the missed payments can be removed from your credit report. And if that happens, your credit score may go up, which is a good thing.
Moreover, private student loans are not eligible for key federal student loan programs like income-driven repayment, Public Service Loan Forgiveness, and loan rehabilitation. ...
There are two other instances in which your loans may be forgiven without making a payment:
To benefit from PSLF, you should repay your federal student loans under an income-driven repayment plan. Learn more about PSLF now! If you're interested in PSLF, contact FedLoan, the PSLF servicer, as soon as possible at 1-855-265-4038.
Your payments do not have to be in consecutive order, but they must be made on an income-driven repayment plan. In order to qualify, you must submit a Public Service Loan Forgiveness Employment Certification Form each year. Then at the end of 10 years, submit the formal Public Service Loan Forgiveness application.
The next popular question is, "Can my stimulus check be garnished for unpaid debts?" The answer to this is yes AND no. The new checks cannot be garnished to pay back taxes, child support, or outstanding student loans.
Your second check couldn't be taken to pay overdue child support. ... For certain outstanding debts -- including past-due child support and unpaid student loans -- the IRS can withhold some or all of your unpaid stimulus payment issued as a Recovery Rebate Credit when you file your taxes.
PROCESS: In a normal year in the United States, if you default on a federal student loan, the Department of Education can take your tax return from the IRS before it gets to you.
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