Due to issues with their current provider, Mohela, the Department of Education will move over a million student loan borrowers to new servicers. The process is underway, and affected borrowers will receive notifications and need to set up new accounts with the new servicers. Automatic payments may need to be re-enrolled to receive discounts. If you encounter problems with your servicer, you can file a complaint with the Federal Student Aid unit.
The Federal Reserve kept interest rates the same this week, which means borrowing costs like those for credit cards, mortgages, and auto loans will not get any cheaper for consumers. This move crushes hopes that the Fed might start lowering rates this year, which could have relieved the financial strain on households. Instead, only one rate cut is expected later in the year, and even that may not provide much relief since inflation remains high and interest rates are expected to stay at current levels for some time.
Borrowers awaiting student loan forgiveness have until April 30th to request loan consolidation, which merges federal loans into one. This could accelerate forgiveness, as you'll receive credit for all payments since your first loan, regardless of its disbursement date. However, remember that consolidation may reset the forgiveness timeline, so consult an expert before proceeding.
The Biden administration has released the proposed rules for its revised student loan forgiveness plan. It could reduce or eliminate debt for certain borrowers, including those eligible for existing cancellation programs, in long-term repayment, at questionable schools, or in financial hardship. Borrowers may also get up to $20,000 of unpaid interest forgiven. The plan is still subject to public comment and will likely be finalized and implemented in the fall.
The Biden administration's student loan forgiveness plan aims to wipe out debts for millions of Americans, starting as early as this fall. This move aims to boost the Democratic presidential candidate in the upcoming 2024 election, as it resonates with young voters and contrasts with the Republican stance of opposing debt relief for students. However, the plan could face possible legal challenges, which could delay or prevent its implementation.
President Biden's plan proposes up to $20,000 in student loan forgiveness for certain groups. Loan forgiveness granted before 2026 will not result in federal tax liability. However, future forgiveness may be subject to federal taxes and potentially state taxes. Borrowers who receive forgiveness under income-driven repayment plans after 2025 may face tax consequences. It's important for borrowers to consider how tax implications could impact them.
