When can North Carolina borrowers actually expect to receive student loan forgiveness?
Qualified borrowers across the country, including those residing in North Carolina, are now waiting to determine when the Biden administration’s student loan forgiveness initiative will be reflected in their accounts.
In the plan, President Biden promised up to $10,000 in forgiveness for federal student loan borrowers and up to $20,000 for Pell Grant recipients. Those who earn less than $125,000 a year, including married couples and heads of households that earn less than $250,000 a year, are eligible.
The White House said that nearly 8 million borrowers will have their student loans forgiven automatically thanks to income data already reported to the United States Department of Education.
Others will have to manually apply for relief.
That application is not available online just yet, but the Department of Education has already started developing an efficient application process so that borrowers can receive forgiveness at the end of the year.
“The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief. The application will be available no later than when the pause on federal student loan repayments terminates at the end of the year,” The White House said in a statement.
The Federal Student Aid office recommends borrowers complete the form as soon as possible once it becomes available, or more specifically, before Nov. 15.
After the application is submitted, it will take anywhere from four to six weeks to process and reflect on borrowers’ accounts, FSA stated.
The freeze on student loan repayments is set to expire on Dec. 31. Applications received after payments start back up in January 2023 will still be processed, according to the FSA website.
Despite concerns over the state tax obligations North Carolina borrowers could face after receiving loan forgiveness, White House officials confirmed that debt relief will not be considered taxable income on federal taxes.
The Department of Education has a notification system for loan borrowers who want to be alerted when the forgiveness application becomes available online. Qualified borrowers can sign up for notifications through the Department of Education’s subscription page.
This story was originally published August 31, 2022 at 3:07 PM.
