May 19, 2022

Student Loan Forgiveness: What’s in store for Borrowers

Forgiveness

The Biden Administration recently announced that borrowers should expect an update regarding student loan forgiveness in the coming weeks.

Since his presidential campaign in 2020, Biden has pledged to cancel at least $10,000 of student loan debt per borrower, and it appears that this campaign promise may actually come to fruition.

While a proposal has yet to be finalized, a decision should be reached before August 31, 2022, when the current federal loan forbearance expires.

This article will break down Biden's latest proposal, how it may affect you, and how you can create your own student loan forgiveness with Chipper Roundups.

How much Should Borrowers Expect to have Forgiven:

While meeting with the Congressional Hispanic Caucus last month, Biden reportedly said he was "looking to forgive most federal student loan debt" leaving many borrowers to wonder if total loan forgiveness might be in store.

Since then, Biden has rolled back that statement saying that he's looking at forgiving "some" federal student loan debt and affirmatively stating that he's "not considering $50,000 in debt reduction" during a recent speech.

Instead, the White House has recently stated that it's exploring a proposal to forgive up to 10k per borrower through an executive order. A proposal that, if finalized, would completely eliminate the debt of approximately 12 million borrowers, according to the Federal Reserve Bank of New York.

While the administration is still working to reach a final decision, the administration is also considering adding an income cap of $125,000—meaning that borrowers earning more would not be eligible for relief through this order.

Though nothing is official yet, high-income borrowers should plan accordingly.

Think your income may exclude you from federal loan forgiveness? Then, you can create your own "forgiveness" with Chipper Round-Ups.

What does Federal Student Loan Forgiveness mean for Borrowers:

While many are hopeful that Biden will make good on his campaign promise and forgive up to 10k per borrower (subject to an income cap), others are concerned about the potential implications of moving forward with this proposal.

First, some borrowers are concerned about the potential tax implications of student loan forgiveness. While outstanding debt discharged through the Public Service Loan Forgiveness program has always been tax-free, discharge of indebtedness is generally treated as a taxable event.

However, a provision of the American Rescue Plan, passed in March 2020, temporarily exempts federal loan forgiveness from being taxed through 2025. While this exemption would apply to federal loans forgiven under an income-driven repayment plan, it would also presumably apply to any student loan debt canceled by the president under an executive order—although this has yet to be officially confirmed.

Though taxes may not be an issue, others are concerned that student loan forgiveness may signal the end of student loan relief.

White House Press Secretary Jen Psaki was recently quoted saying, "between now and August 31, [the student loan pause is] either going to be extended or we're going to make a decision about canceling student loan debt," leaving many to assume that cancellation would mean the expiration of the federal pause.

While many experts initially speculated that we'd likely see an extension through at least after this year's midterm election on November 8th, it's unclear how widespread cancellation may affect ongoing relief.

With this in mind, borrowers should prepare to resume making payments starting in September until we have a better idea of what's to come.

How you can Create your own Loan Forgiveness with Chipper:

Whether you're a high-income earner or someone with more than 10k worth of federal student loan debt –you can still create your own loan forgiveness with Chipper.

With the Chipper Round-ups, you can chip away at your student loan debt with your everyday purchases!

When you use Round-ups, spare change from your everyday purchases are automatically rounded up to the nearest dollar and paid towards your student loans without lifting a finger.

Here's how it works:

  • Link your loans to Chipper.app
  • Link your card(s)
  • Spend as you normally would
  • Watch your loan balance go down!
  • Skip or pause whenever you want

To learn more, head to Chipper.app/round-ups and start chipping away at your student loans today!

Use Chipper for Lower Payments

Chipper can help you find a student loan repayment plan that actually fits into your budget. You simply fill out your information and link your student loan account for us to generate your options in seconds. We help the average student loan borrower save over $300 a month off their student loan monthly payment. Lowering your monthly payment plan can game changing for your personal finance and can be done in minutes! Sign up for Chipper today to get on track with your student loans.

Use Chipper for The Best Path to Forgiveness

Finding your path to student loan forgiveness is easier than ever before. Chipper helps members find better Income-Driven Repayment (IDR) plans every day. Once enrolled in an eligible repayment plan, we can help you explore your forgiveness options and understand your path towards forgiveness. Sign up with Chipper today and get on track with your student loans.

Use Chipper for Round-Ups

Paying off your student loans doesn’t have to be a long and painful journey. Round-Ups are a way to directly pay off your loans with your everyday spending! By tracking your linked spending account(s), we will calculate the rounded up amount from each transaction in a week (IE spending $4.28 would add $0.72 to the weekly amount). We then initiate a payment towards your student loan for the weekly amount. Get chipping away on your student loans with Chipper today.

Use Chipper for Public Service Loan Forgiveness (PSLF)

The Public Service Loan Forgiveness (PSLF) program was created to provide relief to borrowers aiding the public sector. Unfortunately, 30% of applicants are denied due to incorrect paperwork. We can help! Chipper was created to solve this issue by assisting borrowers in understanding their options as well as allowing forgiveness eligible users enroll into the best forgiveness program available. Sign up for Chipper today to see your student loan forgiveness options and get the forgiveness you deserve.

Use Chipper for Teacher Loan Forgiveness (TLF)

The Teacher Loan Forgiveness (TLF) program was created to enable teachers working in Title 1 schools to receive student loan forgiveness of up to $17,500 (depending on their teaching subject). Chipper has helped teachers from all over the country qualify for TLF program and can help you get the forgiveness you deserve today. Find out if you qualify for forgiveness in minutes with our employer search tool.

See How Much You Can Save with Round-Ups

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