"Income-based repayment plans give borrowers monthly payments based on their income, with the promise of loan forgiveness after 20 or 25 years, depending on when they first enrolled in the plan. An email from the Department of Education told eligible borrowers that their servicers would notify them when their discharges have been processed, and those notifications are now starting to trickle in."
"The email also clarified that this relief is not considered taxable income due to a 2021 provision in the American Rescue Plan that made student-loan forgiveness tax-free through 2025. Borrowers who received the Thursday emails that Business Insider viewed had forgiveness "effective" dates marking the final payments needed under the IBR plans as early as January 2025. That means that even if servicers do not finishprocessing the relief until next year,borrowerswould not be taxed due to the 2025 effective"
Servicers have begun sending emails confirming that eligible income-based repayment borrowers have had their federal student-loan balances zeroed out. Borrowers qualify after completing required payments under income-based repayment plans, which calculate monthly payments based on income and promise forgiveness after 20 or 25 years. The Department of Education paused processing earlier this summer amid litigation and later confirmed it would resume processing eligible discharges. Notifications dated Oct. 23 have started arriving, and the relief is not taxable under a 2021 American Rescue Plan provision through 2025. Some effective dates mark final payments as early as January 2025.
Read at Business Insider
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