With student loan forgiveness starting, we’ve rounded up some of the most commonly asked questions and have some inspiration for what you should do with the money you no longer have to pay back.
How much will be forgiven?
- Up to $10,000 for most people
- Up to $20,000 for Pell Grant recipients (login to your Federal Student Aid account to find out what type of loan you have)
How do I know if I’m eligible?
- During the pandemic, you must have made less than $125,000 (for individuals) or under $250,000 (for married couples or heads of households.
What types of loans are covered?
- Federal student loans, including Parent PLUS Loans and Grad loans
What types of loans aren’t covered?
- Private loans or FFEL loans (Federal Family Education Loans)
How do I apply for student loan forgiveness?
- Register to be notified when the application is live here. Select NEW!! Federal Student Loan Borrower Updates.
Will I be taxed on this?
- According to The White House, the relief falls under the American Rescue Plan and is not considered as federally taxable income. It may be taxable in certain states as state tax.
How long do I have to apply?
- You can apply until the end of 2023.
What to do with your student loan savings
- Build your emergency fund
- Set aside a portion of your savings from student loan payments for a rainy day. Put the savings in an account that accrues interest—small is never a bad way to start.
- Pay down debts
- Whether you have credit card debt or want to get rid of any remaining student loan debt faster, this is a smart way to spend the savings so you won’t keep paying interest.
- Increase your 401K contributions
- If you have a 401K account or your employer offers one, increase the amount you put toward it. If you don’t have one, now is the time to open one and start saving for retirement.
- Sign up for Brigit Plus
- For less than $10/month, you can build (or rebuild) your credit, have access to cash for emergencies, and get insights into your finances.
- Invest in yourself
- Learn something new that you’ll enjoy or can benefit from. From pottery classes to courses on the stock market—there are plenty of options out there.