I can’t speak for all the cases, but for a significant number, such as my case, the loans are being forgiven under existing law which allows your remaining balance to be forgiven after you’ve made 25 or 30 years of consistent loan payments, depending on the type of loans. In my case, I made the mistake of consolidating my ex-wife’s student loans with mine back in the day so we just had one payment. Her portion was much more than mine, however because they were now in my name, I got stuck with them after we divorced a dozen years later. Fast forward to a couple weeks ago and I was looking for a new fixed rate loan to refinance the balance of around $40k at a lower rate when I discovered the balance was now zero. I thought it was an error, but a couple days later I received a letter stating that because I’d made 300 payments, the balance was waived, and that I’d in fact get a small refund for overpayment. The law was there, but in the past you had to file for the forgiveness. Now it seems they are being proactive. The letter also states that any waived balance is NOT considered federally taxable. State law may vary. Do I feel guilty for getting the loan forgiven? Not one bit. After 25 yrs I already paid far more than the original balance back to the Feds.
My clients student loans were less than 10 years old, and she has never made a payment, ever. She has been in deferment the entire time. I looked more into that regulation that let you be forgiven after a certain number of years and the way it’s written Includes zero payments. Meaning someone can be deferred forever and then finally get it for free. I took my daughters student loans out in my name instead of hers so that she was not burned right out of college and I paid over $100,000!
I can’t speak for all the cases, but for a significant number, such as my case, the loans are being forgiven under existing law which allows your remaining balance to be forgiven after you’ve made 25 or 30 years of consistent loan payments, depending on the type of loans. In my case, I made the mistake of consolidating my ex-wife’s student loans with mine back in the day so we just had one payment. Her portion was much more than mine, however because they were now in my name, I got stuck with them after we divorced a dozen years later. Fast forward to a couple weeks ago and I was looking for a new fixed rate loan to refinance the balance of around $40k at a lower rate when I discovered the balance was now zero. I thought it was an error, but a couple days later I received a letter stating that because I’d made 300 payments, the balance was waived, and that I’d in fact get a small refund for overpayment. The law was there, but in the past you had to file for the forgiveness. Now it seems they are being proactive. The letter also states that any waived balance is NOT considered federally taxable. State law may vary. Do I feel guilty for getting the loan forgiven? Not one bit. After 25 yrs I already paid far more than the original balance back to the Feds.
My clients student loans were less than 10 years old, and she has never made a payment, ever. She has been in deferment the entire time. I looked more into that regulation that let you be forgiven after a certain number of years and the way it’s written Includes zero payments. Meaning someone can be deferred forever and then finally get it for free. I took my daughters student loans out in my name instead of hers so that she was not burned right out of college and I paid over $100,000!