Applications for federal student loan relief now open, here’s how to apply
MADISON, Wis. — Applications are now open for President Joe Biden’s federal student loan relief plan.
The single-page application asks for the borrower’s name, Social Security number, date of birth, phone number, and e-mail address. After a borrower submits the application, the federal government will use the information provided to determine if the borrower is eligible for student loan forgiveness of up to $10,000 for those who did not qualify for federal Pell Grants and $20,000 for those who did.
You can find the application here. Applications must be submitted by Dec. 31, 2023 in order to be considered.
The Department of Education will notify those whose applications are approved and will work with their loan servicers to forgive the debt. The relief will be applied directly to the borrower’s account, and the loan servicer will notify the borrower directly once the relief is applied. If the borrower still has an outstanding balance after the $10,000 or $20,000 is applied to the account, the servicer will notify them of what their new monthly payment will be once payments resume next year.
In order to qualify, individuals need to have made less than $125,000 in 2021 or 2020, and families need to have made less than $250,000. The one-time debt relief will not be taxed at the federal level, but some states — including Wisconsin — will tax the forgiven amount.
RELATED: Wisconsin borrowers will have to pay taxes on student loan forgiveness
Wisconsinites receiving $10,000 in student loan relief can expect to be hit with a tax bill of about $530 unless the state legislature changes state law, which currently treats debt forgiveness as a type of income. That change, however, is unlikely due to the Legislature not being scheduled to return to session before the end of the year and Republican leaders indicating they do not support the student loan relief program.
The program has been the focus of several lawsuits across the country seeking to block or invalidate the loan relief, but many of those suits — including one brought by conservative groups in Wisconsin — have been thrown out by federal judges who ruled the groups filing the suits do not have the standing to sue, or could not prove they were being harmed by the policy.
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