Student Loan Forgiveness: The Pros and Cons
Automatic Loan Forgiveness Announced by Biden-Harris Administration
Important Information for Borrowers
On August 24th, the White House announced its plan to forgive up to $20,000 in federal student loans for millions of borrowers. Under the plan, individuals making under $125,000 per year and couples making under $250,000 per year will be eligible for debt relief. Additionally, the administration announced the automatic discharge of $12 billion in loans for borrowers who previously attended certain for-profit colleges that are now defunct.
The White House also announced a new income-driven repayment (IDR) plan that will lower monthly payments and forgive any remaining balance after 20 years of payments. To qualify for PSLF, borrowers must make at least 10 years worth of payments on an IDR plan.
The announcement has been met with mixed reactions. Some borrowers are excited about the prospect of having their student loans forgiven, while others are concerned about the potential tax implications. The amount forgiven is taxable under some programs but not PSLF.
If you are a student loan borrower, it is important to understand the details of the administration's plan and how it might affect you. You should also be aware of the potential tax implications of loan forgiveness.
For more information on the student loan forgiveness plan, please visit the Department of Education's website.
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