Here's where the situation stands now when it comes to student loan forgiveness; we'll continue to update this story as it develops. Also, you could get up to $50,000 back with one-time COVID credits. For more on the new child tax credit, check here to see who is eligible and how to calculate your total.
Where does Biden stand on forgiving student loan debt right now?
In Biden's American Rescue Plan, a provision removed any tax penalty if student loans are forgiven. The IRS treats debt discharged for less than what's owed as taxable income. This would apply to both government and private loans. The forgiveness provision lasts until Dec. 25, 2025. However, as president, Biden has yet to formally forgive additional student loan debt.
"I'm prepared to write off a $10,000 debt, but not 50" [thousand], Biden said. "Because I don't think I have the authority to do it by signing [with] the pen."
It appears the president may have changed his mind. On April 1, he asked Education Secretary Miguel Cardona if it's within the president's power to cancel $50,000 in student loan debt. The department has yet to announce its findings.
Will anything happen this year?
Depending on the response from the secretary of education's office, a few things could take place. Biden may be able to sign an executive order that cancels some debt per student. Or it may be that Congress would have to pass a bill if sweeping cancellations are outside Biden's power. In either case, the final amount canceled, and any rules and exceptions involving public and private debt, would be contentious areas of negotiation.
Whatever the outcome, it's unlikely to occur imminently, though it's a topic we're keeping a close eye on.
3 student loan forgiveness options you might be able to get
However, they're not so widely available -- or quick to receive.
Public Service Loan Forgiveness is a government program intended to forgive federal direct student loans if the borrower has a job with the government or a nonprofit organization, after 120 qualifying on-time payments in an income-driven repayment plan. This means after 10 years of making payments, the government is supposed to forgive the balance. However, many borrowers who believe they're qualified for forgiveness are having trouble getting approved.
And lastly, borrowers who are on an income-driven repayment plan -- in which the monthly payments are no more than 10% of a person's discretionary income -- can have their remaining loan balance forgiven after 20 years for undergraduates, or 25 years for graduate students.