Student Loan Debt: Changes To Know About for Fall 2022

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Starting in September, tens of millions of student loan borrowers will begin applying for student loan forgiveness. Are there any other changes to student loans borrowers need to know about this fall?

Here are key dates, and changes, to take into consideration.

The Student Debt Relief Plan Is a One-Time Event

Borrowers eligible for the Student Debt Relief Plan need to take advantage of this opportunity. This forgiveness is a one-time relief and unlikely to happen again.

Still feeling uncertain whether your loans will receive relief? Mark Kantrowitz, author of “How to Appeal for More College Financial Aid,” shares with GOBankingRates which loans are eligible through this relief plan:

  • Eligible loans include loans disbursed by June 30, 2022.
  • Federal Direct Consolidation Loans made after June 30, 2022 are eligible if they include only loans disbursed prior to this date.
  • Parent PLUS loans are eligible.
  • If you received a federal Pell Grant when you were in college, you may qualify for up to $20,000 in forgiveness. Borrowers who did not receive a federal Pell Grant can receive up to $10,000 in forgiveness. The up to, Kantrowitz said, is because the forgiveness is based on the loan balance or the threshold, whichever is less.
  • Private student loans are ineligible.
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Submit Your Forgiveness Application When It Becomes Available 

About eight million borrowers will receive automatic forgiveness because the U.S. Department of Education has their income information. Kantrowitz recommends other borrowers submit a simple application form. This form will be available online by October 2022 and borrowers will have until December 31, 2023 to submit their application.

How soon does forgiveness begin? Forgiveness will occur four to six weeks after the application is received. Borrowers who want to receive forgiveness before the restart of repayments should submit the application by November 15, 2022. 

If you made payments to your federal loans during the pandemic, Kantrowitz said borrowers can request a refund of those payments to maximize the amount of received forgiveness.

The PSLF Waiver is Expiring 

Erik Kroll, CFP and owner of Student Loans Over 50, said a significant student loan change to keep in mind is the upcoming expiration date for the PSLF waiver. This waiver allows for retroactive credit toward PSLF payment requirements including credit for late and impartial payments and loans in forbearance and deferment.

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The PSLF waiver is set to expire on October 31, 2022. It’s possible there could be a waiver deadline extension, but Kroll said it seems like a low probability.

Is Student Loan Forgiveness Taxable Income?

The answer to this question may change in the coming months depending on legislative action. Dane Janas, EA and tax partner at Moravia Advisors LLC, said the federal government and IRS have announced student loan forgiveness will not be taxable income on a federal level. 

The state level ultimately depends on where you live. So far, California, Indiana, Missouri and North Carolina have announced student loan forgiveness will be taxable. Eight states — Idaho, Hawaii, Kentucky, Massachusetts, New York, Pennsylvania, South Carolina and Virginia — have announced they will make an exemption for upcoming student loan forgiveness. 

Four more states, including Arkansas, Michigan, Wisconsin and West Virginia, have yet to make an official decision on whether to tax student loan forgiveness. 

“Wherever you may live, be careful to stay abreast of your state’s treatment of student loan forgiveness,” Janas recommends.

Repayments Restart in January 2023

This is not exactly fall specific, but it is an important date to mark on your calendar. Next year, student loan repayments will restart in January 2023.

“If you’re on an income-driven repayment plan, the earliest you’d be required to recertify your income is July 1, 2023,” said Kroll. “Otherwise, income recertification is pushed out to 12 months.

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About the Author

Heather Taylor is a senior finance writer for GOBankingRates. She is also the head writer and brand mascot enthusiast for PopIcon, Advertising Week’s blog dedicated to brand mascots. She has been published on HelloGiggles, Business Insider, The Story Exchange, Brit + Co, Thrive Global, and more media outlets. 

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