At this time, the Office of Student Financial Aid has access to most of the same information as the general public. However, as more detailed specifics are released, our team will make sure to communicate with the UW-Madison community to make sure all eligible student loan borrowers are able to benefit.
Official Announcement – https://studentaid.gov/debt-relief-announcement/
A Plan in 3 Parts:
Part 1 – Final extension of the student loan repayment pause
The repayment pause is automatically continued until December 31, 2022. Repayment restarts in January 2023.
Part 2 – Loan cancellation
One-Time Student Loan Debt Relief Info – https://studentaid.gov/debt-relief-announcement/one-time-cancellation
- We also expect this website to be updated as more details are released; check back.
Important points we know so far…
- This cancellation applies to Federal Student Loans disbursed by 6/30/22, so it will not apply to any loans taken out for this current 2022-23 academic year and on.
- This applies to ANY Federal Direct Loans
- This DOES NOT include Institutional Loans from UW-Madison or Private Loans.
- NOTE – Because Perkins Loans taken out from UW-Madison are not serviced by the Department of Education, rather ECSI, these will also not qualify. However, the Department of Education has stated that if you apply to consolidate a Federal Perkins Loan into a Federal Direct Loan, you will be able to apply this debt for relief. There are some pros and cons to consolidation – outside of the possible debt relief you may receive, https://studentaid.gov/manage-loans/consolidation#should-i – review them carefully to decide if consolidation makes sense for you.
- About 8 million students will have the cancellation automatically applied (those currently in income-based repayment). Others will need to apply. The application is expected sometime in early October, but no official date has been released.
- If you would like to be notified when the application is open, please sign up at the Department of Education subscription page.
- Apply before November 15, 2022 in order to receive relief before the payment pause expires on December 31, 2022.
- Borrowers will have until December 31, 2023 to submit their application for student loan debt relief.
- Although this debt cancellation will not impact any federal taxes you pay, if you are a Wisconsin resident, you will have to pay state taxes on any canceled debt.
- As of Sept 2022, we are aware of 7 states that will tax this canceled debt, including Arkansas, California, Indiana, Minnesota, Mississippi, North Carolina and Wisconsin – https://www.insidehighered.com/news/2022/09/15/seven-states-will-tax-debt-relief-now. Check with your state of residence.
How to review your federal financial aid including Federal Student Loans and the Federal Pell Grant:
- Current Students – use your MyUW Student Center to review your financial aid for each year you’ve been a student. There you will see if the Federal Pell Grant and/or Federal Direct Subsidized or Unsubsidized Loans are listed.
- Current & Former Students/Alumni – log into studentaid.gov with your FSA ID and password to review you Federal Student Aid history, which will include the Federal Pell Grant (if you received it) and/or Federal Direct Subsidized/Unsubsidized Loans.
- If you received either Pell Grant or Federal Direct Loans prior to 1994, these will unfortunately not be reflected on Studentaid.gov, BUT the Department of Education has reassured us that your information is still on file and will qualify.
Part 3 – Create a new income-driven repayment plan
Substantially reduce future monthly payments for lower- and middle-income borrowers.