On August 24, the U.S. Department of Education announced a final extension of the federal student loan relief through December 31 [U.S. Department of Education, Press Release, 8-24-22]. Payments on loans will resume in January 2023.
During this extension of relief for federal student loan borrowers, repayments, interest, and collections are still halted, and any borrower with defaulted federally held loans whose employer continues to garnish their wages will receive a refund of those garnishments. The relief had been set to expire on August 31.
Information about the payment restart will be released as the end of the pause approaches.
Targeted Debt Cancellation
Targeted student debt cancellation will be granted to borrowers with loans held by the Department of Education. Borrowers with annual income of less than $125,000 (for individuals) or less than $250,000 (for married couples or heads of households) who received a Pell Grant will be eligible for up to $20,000 in debt cancellation. Borrowers who meet those income standards but did not receive a Pell Grant will be eligible for up to $10,000 in relief.
The Department will announce further details on how borrowers can claim this relief in the weeks ahead. The application will be available no later than when the pause on federal student loan repayments terminates at the end of the year.
To learn more about federal and state laws, regulations, and information to keep your company’s payroll operations in compliance, check out Payroll Source Plus!
Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for the APA.