Tax guide

COVID-19 Tax Relief for Student Loan Borrowers

Those with student loan debt will be afforded the following relief:

Payments on federally-owned student debt can be deferred through September 30, 2020 – the loans, in effect, are suspended. This includes loans made to parents.

In addition, interest payments are also suspended until September 30.

Note: Suspended payments will appear as regularly rescheduled payments by credit reporting agencies.

Debt collection is suspended for borrowers who have defaulted on student loan debt. This means collectors will not take actions to collect payment, such as deducting from a tax refund or garnishing wages.

For those on a loan forgiveness program, suspended payments for these months will still count. An example of this would be the Public Service Loan Forgiveness (PSLF) program.

$1.8 billion in refunds will be returns by the government to over 800,000 student loan borrowers – this applies to borrowers who have defaulted on their loans and have gone through debt collection since the coronavirus pandemic was declared a national emergency.

Employers can pay student loan payments, up to $5,250, tax free up to January 1, 2021.

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