On August 24, 2022, President Biden announced the forgiveness of up to $20k in student loans for Pell Grant recipients and $10k for other qualifying federal loan borrowers. Biden also extended the federal student loan payment pause through the end of the year. While there are plenty of inequities in the United States and discussions to be had around the root of the student loan issue, as advisors we use the cards dealt to advise our clients on their best path forward.
To qualify for the forgiveness, individuals must earn less than $125k for single and $250k for married. There will be more to come on this in the coming weeks but we imagine this will be based on 2020 or 2021 income. We advise clients to postpone paying down these loans, particularly past these amounts if forgiveness is applicable, until the pause ends.
Please let us know if you have any questions or want to jump on a quick call to review your financial plan given this news.