These WSJ reporters do a good job of answering student debt forgiveness questions

I’ve seen a few articles thus far which purport to give you “Six Takeaways About Student Debt Forgiveness” or something like that.

However this Q&A with Wall Street Journal personal-finance reporter Julia Carpenter and WSJ podcast host host J.R. Whalen cleared up more questions I had than any other:

J.R. Whalen: All right. So first of all, Julia, who’s eligible to have part of their student loans forgiven?

Julia Carpenter: Borrowers with federal student loan debt are eligible for up to $10,000 in relief if they earn less than $125,000 a year or under $250,000 a year for couples. The other thing is people who received Federal Pell Grants in college will also be eligible for up to $20,000 in forgiveness, and Pell Grant recipient graduates hold about $4,500 more in debt than other graduates.

J.R. Whalen: Yeah. And usually Pell grants are usually awarded only to undergraduate students who have exceptional financial need. Now, how about people with private loans?

Julia Carpenter: Unfortunately, only federal student loan borrowers are eligible for this loan forgiveness.

J.R. Whalen: Okay. So how about Parent Plus Loans, where families borrow money to help a student pay for their education? How do they work into this?

Julia Carpenter: So the forgiveness applies to borrowers of both Parent PLUS and Grad PLUS programs. Families can borrow the total cost of attendance, that’s room and board, other expenses. And this forgiveness applies to federal loans for both undergraduate and graduate programs, as well as to Parent PLUS Loans.

J.R. Whalen: Now, we should also mention that the pause on student loan repayments that’s been in place since early in the pandemic, that’s also been extended. And now the date that payments are set to resume is December 31st. But I want to ask about the timing for the debt forgiveness. When does that kick in?

Julia Carpenter: The Department of Education says we’ll get more details in the next few weeks, but the timing’s a little unclear right now. We know that this will definitely happen before student loan payments are set to resume in January 2023.

J.R. Whalen: Okay. So what does a borrower have to do to take advantage of the forgiveness?

Julia Carpenter: Nothing yet. Wait until you receive a notification from your loan servicer. Before that happens, beware of any friendly-sounding phone calls or suspicious-looking emails from addresses you don’t recognize. Even before the announcement was made official on Wednesday, I personally received two different phone calls with voicemails and friendly-sounding people saying, “Hi, I’m your student loan servicer. Just call me. I have to confirm some details with you.” So this might be an opportunity for some scam calls, spoof messages, anything from people trying to get your personal data. And in the meantime, double check the information you’ve already shared with your loan servicer and the website. If you’ve recently moved, or if you’ve changed any of your contact information, you’re going to want to make sure that they have the most up-to-date addresses.

J.R. Whalen: Oh, okay. Now what if somebody owes less than $10,000 in federal loans?

Julia Carpenter: So if you owe less than $10,000 on your loan, congratulations! You’ll now be student debt-free.

J.R. Whalen: Well, that’ll be a relief to some people. Now how about those who have already paid off their student loans?

Julia Carpenter: Unfortunately, the forgiveness isn’t retroactive and won’t apply to balances that have already been paid off.

J.R. Whalen: Julia, debt forgiveness is often treated as income and has to be accounted for on tax returns. What’s the situation in this case?

Julia Carpenter: Fortunately for borrowers, this canceled student debt is federally tax-exempt, and we’ve seen that in other federal student debt forgiveness programs. And so in this case, you would not have to account for this federal forgiveness on your tax return.

I had student loans I paid off, and I do not feel at all cheated that someone else is going to get something I didn’t. That is how the world works, time marches on, and I am happy that anyone is able to spend $10K or $20K in what are likely to be more productive ways for the economy than sending the money to loan servicers every month.

After all, as many others besides me have noted, Wall Street and the GOP didn’t think twice about giving massive economy-busting tax breaks to business in 2017. And some of the loudest voices in the right-wing echo chamber screaming about a piddling $10K to students, got hundreds of thousands of dollars in government COVID relief loans forgiven 100% — just wiped out. They didn’t have to pay a penny, no matter how much profit they are making.

Conservatives and big business love when the government gives them money. When it goes to average Americans? That pisses them off.

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