GREENVILLE, N.C. (WITN) – A portal to request student debt relief is now live. Here in Eastern Carolina, this could impact a large portion of East Carolina University’s student body, but financial experts say it’s not as simple as some may think.
On the surface, student debt relief can sound like free money. The student loan forgiveness application officially launched Monday, giving qualified students the chance to apply for debt relief of up to $20,000.
ECU Financial Aid Director Julie Poorman said this is significant for the 64% of the student body that takes out loans.
“They have to be loans that were dispersed prior to June 30, 2022, and that would be thousands and thousands of loans,” Poorman explained.
The relief is for people who made less than $125,000 in 2021 or 2020 or families that made less than $250,000 during that time. Unsurprisingly, scammers are taking advantage of the excitement around debt relief.
“The Department of Education never says they’re going to call you, they say they will email you. If anybody calls you and says ‘I wanna confirm your social security number,’ hang up,” Poorman said.
And that’s not the only warning. Under current state statutes, student loan forgiveness is taxable income.
“Be alert to the fact that this might not be quite the gift that it feels like at this time,” Poorman explained. “It would be an unintended consequence to have $10,000 in your student loan debt forgiven and then turn around and add that to your adjusted gross income in the tax year.”
Still, it’s relief that many students are desperate to have.
“It’s a sense of anxiety because it’s like, yes, it’s great that you’re graduating, but as soon as you get out of school, people are gonna be asking you for money,” ECU Junior Jadison Allen says.
There are several lawsuits challenging the legality of the debt relief program. Depending on their outcome, borrowers may have to start making payments again in January 2023 just like they normally would.
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