How much debt is getting canceled?
Biden announced last month that most federal student loan borrowers will be eligible for some forgiveness: up to $10,000 if you didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if you did.
There’s a good chance you received one as part of your financial aid package while at college: Of the estimated 43 million borrowers who will benefit from the administration’s forgiveness plan, more than 60% are Pell Grant recipients, according to the White House.
If you’re unsure whether you received a Pell Grant as part of your financial aid package, you can check your account on studentaid.gov. On the main page of your account, there’s a section titled “My Aid.”
Alternatively, you can check with the financial aid office of the college you attended to see if it can provide you with that information.
The relief will be limited to borrowers who make less than $125,000 per year, or married couples or heads of households earning less than $250,000.
Review your recent tax returns to confirm your income fell below those thresholds in 2020 or 2021 (either will work). The U.S. Department of Education will be considering people’s so-called adjusted gross income, or AGI, which may be different than your gross salary.
To confirm your AGI for 2020 and 2021, look for line 11 on the front page of your tax return, as Form 1040.
Will the loan forgiveness trigger taxes?
Student loan forgiveness won’t trigger a federal tax bill.
source: cnbc & the white house