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Contact your lender
Due to the pandemic era halting payments on student loan bills, most borrowers have not been paying for more than two years. Invoices will now go to the mailbox again in September.
Even if some student debt is cleared, you may still have a balance and you’ll want to check your loan account. They’ll have a lot to learn: Are you getting the relief you’re entitled to? If you have a lower tab, what is it?
Make sure your loan officer also has all of your current contact information so you stay informed of all these changes. You can update your information with your loan officer at StudentAid.gov.
Adding some confusion here is the fact that millions of borrowers will have New loan service at a time when payments continue due to changes in the industry.
Affected borrowers should receive multiple notices, Scott Buchananexecutive director of Student Loan Servicing Alliance, a trade group for federal student loan service providers.
In September, if you mistakenly send a payment to your old waiter, that money will be forwarded to your new one, Buchanan said.
Save
Again, don’t count on student loans wiping out your entire balance.
“In all likelihood, student loan forgiveness will be limited in terms of eligibility and amount, so you cannot count on student loan forgiveness in full,” Kantrowitz said. me.
Student loan forgiveness, if it happens, will likely be limited to federal loans
Mark Kantrowitz
higher education specialist
For example, $10,000 in cancellations would only completely forgive a third of borrowers.
Therefore, Kantrowitz recommends starting to put some money away now to ease the pain of resumption bills.
Waiting for refinancing
Although interest rates are currently low, Kantrowitz said borrowers should think twice about refinancing their debt with a private lender.
“Student loan forgiveness, if it happens, will likely be limited to federal loans,” he said.
You don’t want to miss out on canceling debt while chasing a lower interest rate.
Try to make sure that you will qualify for relief
Millions of people who gave student loans before 2010 according to Federal Family Education Loan The scheme was excluded from the government’s offer to suspend their payments without interest for a period of time. coronavirus pandemic.
There is some concern that these borrowers may also be excluded from any student loans.
As a result, owners of FFEL loans may want to contact their servicer and merge them into one. Direct loan Kantrowitz said.
The main downside to doing so is that your return schedule will be reset, and so if you’re close to the end, that might not make sense.
Don’t stress about taxes
Student loan forgiveness is now tax-free, thanks to a provision included in $1.9 trillion federal coronavirus stimulus package became law in March 2021.
Previously, any student loan debt that was canceled by the government was considered taxable and taxed at the borrower’s ordinary income tax rate.
According to a rough estimate by Kantrowitz, $10,000 in cancellations would result in an additional $2,000 in taxes for the average borrower. If $50,000 for each borrower were canceled, the average person would have to write a check to the IRS for $10,000.
Borrowers now will no longer be interested in these bills.
