Graduates raise concerns over federal student loan cancellation delivery

Published: Oct. 13, 2022 at 9:02 PM CDT
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BIRMINGHAM, Ala. (WBRC) - You should be able to see if you qualify for President Joe Biden’s federal student loan forgiveness plan any day now, but there is still confusion about the program. You can find the eligibility requirements on the White House website, but many graduates are still wondering if you’ll get the full amount and when.

“We’re kind of just waiting to see what happens,” said Mishka Naiker, a 2018 University of Alabama Birmingham graduate. She’s been keeping a close eye on Biden’s student loan forgiveness plan, but is running into confusion on details.

She says even though the application will come out this month, given her experience with a COVID stimulus check, she’s doubtful the money will come in soon.

“I feel like it’s going to take a very long period of time for those loans to actually be forgiven, whether that’s three months, six months, a year, two years,” Naiker said. If you’re wondering if you’ll get the full amount or if you’ll have to pay taxes on it, a finance professor at UAB said it just depends on the state.

“From a federal tax standpoint, this forgiveness is exempt from federal tax. But on a state basis, there are some states where it’s actually going to trigger a state income tax if that state is not in alignment with the federal exemption. But fortunately, Alabama is not one of those states,” said Dr. Stephanie Yates. Even in the states that tax it, she said this can make a big impact.

“That’s potentially a couple of $100 or more back in your pocket each month,” Yates said.

When the application goes live, The White House announced it will only ask for simple information and follow up later if needed.

“Be prepared that if you’ve got to call in... be prepared to wait,” Yates said.

Once the application is open, the period will run from October to the last day of December of this year.

For more information and to get signed up to get an alert about the application opening, click HERE.

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