Will student loan forgiveness be based on 2021 income?
How will officials calculate who qualifies for federal student loan forgiveness?
President Joe Biden’s student loan forgiveness program aims to provide up to $10,000 in federal student debt forgiveness to millions of Americans.
The Forgiveness Plan applies only to federal student loan borrowers. You qualify if your personal income is less than $125,000 per year. For married couples, this maximum is $250,000 per year.
The New York Times reports that “eligibility will be based on your adjusted gross income. Income figures from 2020 or 2021 may make you eligible, but not income from 2022.” The report also says student loans obtained after June 30 are not eligible for relief.
Read more: Are you eligible for Biden’s student loan forgiveness plan?
According to state officials, up to 50% of Michigan residents with federal student debt will see their loans cut in half or entirely forgiven through student loan forgiveness.
The decision is expected to benefit up to 1.4 million Michigan residents who have federal student loans. According to state officials, 30% of residents with federal loans, or about 420,000 people, owe less than $10,000, which would cancel all of their debt.
About 50% of Michiganders with federal student debt, or about 700,000 people, owe less than $20,000, and their debt would be halved or entirely forgiven. Nearly 700,000 additional Michiganders will receive significant loan relief.
Lily: Will Michigan residents have to pay income tax on canceled federal student loan debt?
The federal government student loan repayment pause that was issued during the pandemic is set to expire at the end of December. Americans in student loan debt are expected to resume payments in January.
Biden announced a new income-driven repayment plan for borrowers and explained how he changes the current system.
According to White House, the new plan will allow low- and middle-income borrowers to have smaller, more manageable monthly payments. It will cap the amount borrowers pay each month based on a percentage of their discretionary income, which is the money a person has left over after paying their taxes and other necessary expenses at the cost of life.
Lily: How the new income-based repayment plan for federal student loans would work
Copyright 2022 by WDIV ClickOnDetroit – All Rights Reserved.