(WSPA) – Earlier this fall, we heard a lot about the student loan debt forgiveness program, but for weeks now it has been on hold.
The program has faced numerous lawsuits, one of which is from six states, including South Carolina.
On Thursday night, a federal judge struck down President Biden’s student loan forgiveness program, declaring it illegal.
The Biden administration appealed the decision on Friday. The case is being directed to the United States Court of Appeals for the Fifth Circuit.
That appeals court could send the case back to lower courts or rule in favor of the Biden administration.
It is possible that one or the other of the parties will eventually ask the Supreme Court to take up the case.
So, do you still need to apply? Do you really need help with the app? Scammers think so.
We’ve looked at what you need to know about the process as it currently stands, in this 7NEWS Consumer Exclusive, Loan Forgiveness Update.
26 million applied
When you have big dreams like Wofford sophomore Colby Garner, $10,000 in debt relief is nothing short of a shot in the arm.
“Getting out of my undergraduate debt would be huge to potentially apply to medical school and go through that process to become a doctor,” Garner said.
Garner is one of 26 million people, so far, who have already applied for debt relief on StudentAid.gov.
The process takes about five minutes. You don’t even need to log in. All you need to do is fill in your name, social security number, date of birth, and contact information.
“It also says in bold print, if you don’t hear from us, you should be fine, no further information is needed,” said Carolyn Sparks, director of financial aid at Wofford.
Sparks said the process is much less complicated than applying for a loan, but there are some important things borrowers should keep in mind.
The deadline to apply is December 31, 2023.
However, you will need to apply by mid-November 2022 if you want debt forgiveness to take effect before the loan repayment break ends on December 31, 2022.
Speaking of which, Sparks said college financial aid offices across the country are concerned that people who aren’t used to repaying their loans could quickly default.
“What scares me the most and what’s going on right now is that they’re suddenly going to have to start paying off their student loans… I’m worried about that.”
Scams are another cause for concern.
Jennifer Giesick in Spartanburg County said she was inundated with calls and emails from a company claiming to help her file, for a fee.
“It’s only when they’ve wrapped you up where you think oh I can get help, finally help, someone understands, and then you have to pay us $320 a year,” he said. said Giesick. “And I said for how many years?” Well until it’s paid off. Well, how many years is that? well, 20-28, and I’m like, yeah, no.
According to the Department of Education, “You never have to pay aid with your federal student aid.”
The department lists these three email addresses as the only legitimate ones the agency sends to borrowers.
You can report attempted fraud to the Federal Trade Commission by calling 1(877) 382-4357 or visiting reportfraud.ftc.gov.
How are taxes affected?
One-time student debt relief will not be taxed at the federal level, but some states may choose to tax it at the state level.
What if you’re not eligible?
Unfortunately for many borrowers, not everyone qualifies.
Private loans are exhausted. Even hundreds of thousands of borrowers under the federal Family Education Loans program no longer qualify.
“These are ultimately all federally insured, so why should one qualify and not the other,” Amanda Griffeth, Simpsonville, said.
Griffeth has signed a petition asking the federal government to restore the FFELP program to the list of eligible loans.
“It seems unfair. It’s very much like a bait and switch,” Griffeth said.
So far, 16 million of the 26 million applicants have already been approved, but whether their loans will be canceled will depend on the outcome of these lawsuits, some of which have already been dismissed by the US Supreme Court. .