GREENSBORO, N.C. — Student debt forgiveness, who is it for? Millions.
It's for former students who are paying off those loans.
It's for those in school right now, but your freshman student may not be eligible.
"A lot of people who started school this week or this fall, they applied for the loan this summer, the loan has to be disbursed to the school by June 30th for it to be included," said Betsy Mayotte from FreeStudentLoanAdvice.org.
New college students, pay attention! If your student loan wasn't disbursed to the school by June 30, 2022, chances are your student loan is not part of the debt forgiveness.
How can you know for sure?
“Go to StudentAid.gov and it will show you the first disbursement date of the loan and if that first disbursement date is before June 30th then it's included,” said Mayotte.
Don’t get caught up with the calls, emails, and texts about your loan. Most of those are coming from scammers. The source for you to use is StudentAid.gov.
DEBT FORGIVENESS PLAN
According to President Biden’s plan, any one student debt holder who makes less than $125,000 a year can get up to $10,000 in student loan debt forgiveness. If you have a Pell Grant, you can get an additional $10,000 in debt forgiveness.
Forgiven loans are considered taxable income. The American Rescue Plan - that's the federal law - says forgiven student loan debt is not taxable at the federal level. There are no tax consequences on student debt relief until 2026.
In North Carolina, you'll pay $525 in taxes for every $10,000 forgiven.
“I don't think folks should freak out, but I do think they need to let their legislature or state senator know you don't want to be taxed on any of your loan forgiveness, and the state needs to go along with what the federal law says,” said Ryan Dodson of Liberty Tax Services.