If your kids aren’t getting $10k forgiven right now, then they won’t be taxed right now. You would only be taxed at the time you get the amount forgiven off your principal.
But THIS $10k forgiveness is not taxable income.
At the federal level, that is correct. The person I was replying to said one of her kids lived in a state where it might be taxable.
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Sorry, missed that, but even the state taxes would be owed when forgiven.
They have to come up with the money to pay the state taxes. It may not be that much depending on their other income and the state tax rate, maybe the same as a couple of months of loan payments?
Does this forgiveness change anything to the existing Parent Plus loans monthly minimum payments. Think in current setup only way for Parent Plus loans to have a monthly minimum based on their Gross earnings is that they have to Consolidate there loans in 1 loan. And time period is 10 years to payoff the loans. Dont think it has forgiveness after 10 years or 20 years once the loans are Consolidated . Thats the cons of Consolidate loans. Think they fall under ICR plan and not the other 3 plans which students used.
I did some calculations and my ICR payments were much higher since the loan repayment is based on 10 years and not 25 or 30 years.
Are we expecting any changes like going to 5% minimum instead of 10% or even 20% of Gross income.
I am looking at bare minimum to start with .
Loans are drawn by wife and she has zero income for last few years. My income is around 115k .
They have options like Maried filling tax separately and access to spouse income or not. That options gives me the most minimum payment and even zero payments if no access to spouse income tax …
All her loans are provided by single loan administrator and not all loans are due by end of December . So not sure how the Consolidation even works.
Is the interest on the federal student loans calculated the same way a mortgage or credit card interest is?
A friend seems to think it is different (worse). But I am wondering if she just has no idea how much interest on her mortgage is accumulating!
This article provides a good explanation: https://studentloanhero.com/featured/how-student-loan-interest-works/.
I am trying to figure out if I am going to qualify for the loan forgiveness but am a little confused. As far as the income limits, I definitely qualify. There was only one time when I was in college that I received a pell grant, but I did receive $695 in Pell grant money. My loans were taken out in the 90’s, beginning in Fall 1991 and ending in May 1997. There was a semester or two break where I quit school but then went back. I had some Stafford and some Perkins loans, but I consolidated in 2002. It shows I have $51,104 in FFELP consolidation loans. the original loan amount was $28,539. There were several forbearances and deferments and eventually someone recommended an IBR plan. I am not sure what year that started.
So, do I qualify for forgiveness? I read that they might give some people credit for years where they were steered toward deferments and forbearance, would that mean that I might have enough years to get them canceled? Would I need to consolidate to receive any benefits?
Did you qualify for pandemic pause in making payments?
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I don’t really know. I am on an income-based repayment plan and my payment is set at $0.
Contact your servicer to ask.
And this is a helpful Reddit thread: https://www.reddit.com/r/StudentLoans/comments/wwhr85/megathread_biden_forgiveness_announcement/.
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Here is some information info from National Association of Student Financial Aid Administrators: NASFAA | Education Department Releases More Details About Biden’s Loan Debt Relief.
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Thanks @kelsmom for keeping us updated.
For the FSA account, is that the same one we opened to get a FSA-ID to file the FAFSAs way back when?
My kids are two who were in repayment status but the servicer/ED would not have their income for 2020 or 21 (last filed fAFSA was in 2017), and also wouldn’t know if they received a Pell grant (would they? I don’t see how they would know that).
I’ll encourage them to get the FSA account open if they need to.
If the borrower has an FSA ID, that is what they’ll use to sign into their account. The account is linked to the government federal aid system, which tracks loans and Pell grants. When the application is ready, the borrower will submit that electronically, along with the tax return (it’s possible that they may be able to do a direct retrieval from the IRS, like with FAFSA, but I don’t know that for sure). The system will “know” whether the borrower ever had a Pell grant, so it should be set up to forgive the $20,000 based on the information in the federal system. If a borrower does not have an FSA ID, they will need to set one up to submit the application.
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Any advice on where to get a clear answer as to whether I should go ahead and consolidate into a direct loan? I read some stuff that said they were supposed to credit periods of deferment and forbearance toward the months for cancellation on income-based repayment. If they do, then I should be pretty close to having enough years to have them canceled but I really don’t know. Navient is not very helpful and I don’t trust them at all.
Were your loans eligible for the payment pause the past copy years?
Are you talking about this?
https://studentaid.gov/announcements-events/pslf-limited-waiver
No, mine are privately held FFEL loans and are not eligible.
No, I was not talking about PSLF, but I might have misunderstood. Is that the only thing that the waiver to include periods of deferment and forbearance applies to at this time? My loans have been in alternating periods of repayment/deferment/forbearance since the late 90’s but have not been on IBR nearly that long because they never told me that was an option until I basically used all available time for deferment and forbearance. I would like to take advantage of the $20,000 forgiveness but also don’t want to reset the clock on the period for IBR based forgiveness.
At this time, your loans do not appear to qualify for forgiveness. It is “possible,” based on information I have read, that they “might” end up becoming qualified without consolidation into a Direct Loan … but that’s not a for-sure thing. And consolidating typically increases your balance due to fees, so it’s not necessarily a given that consolidating to get the forgiveness will end up putting you ahead. I assume you are concerned with the number of months to forgiveness under the new rules for repayment, and there really isn’t enough information out yet to know anything for sure. Although there will be a push to do things quickly to get loans forgiven as soon as possible, it’s not necessary to rush into anything. In your case, it may take a bit before the rules are properly fleshed out & Navient gets its customer service reps up to speed to help borrowers figure out how things will work for them.
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