Student Debt Relief Plan
August 25, 2022
Terranova & Associates, LLC strives to keep our clients up to date regarding tax changes that will impact them. U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers’ transition back to regular payment as pandemic-related support expires. This plan includes loan forgiveness of up to $20,000. Borrowers and families may be asking themselves “what do I have to do to claim this relief?” This page is a resource to answer those questions and more. There will be more details announced in the coming weeks. To be notified when the process has officially opened, please watch for our emails.
The following is a summary of the Plan:
1. Final extension of student loan repayment through December 2022, with payments resuming January 2023, and this pause in payments is automatic.
2. U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households. In addition, borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. To be eligible:
a. Your annual income must have fallen below $125,000 (for individuals) or $250,000 (for married couples or heads of households)
b. If you received a Pell Grant in college and meet the income threshold, you will be eligible for up to $20,000 in debt cancellation.
c. If you did not receive a Pell Grant in college and meet the income threshold, you will be eligible for up to $10,000 in debt cancellation.
3. What action is required to receive loan forgiveness:
a. Borrowers may be eligible to receive relief automatically because relevant income data is already available to the U.S. Department of Education.
b. If the U.S. Department of Education does not have your income data - or if you do not know if the U.S. Department of Education has your income data, the Administration will launch a simple application in the coming weeks.
c. The application will be available before the pause on federal student loan repayment sends on December 31st.
As additional information becomes available, we will provide additional updates.
We are available for consultations regarding this and other tax matters if you need assistance, please contact us. We are excited to welcome the new clients that have retained our services!
This is our update as of this time and we will strive to keep you informed; please keep in mind this is a fluid topic and subject to change at any time.
This information should be used to strategically navigate through the months ahead. We are in the office and are happy to assist you.
Please feel free to share this with your relatives and friends and remember we are here to help our clients.
Terranova & Associates, LLC.
Thomas D. Terranova, Jr., CPA, PFS, CITP