Here’s what you need to know about Biden’s student forgiveness plan

For millions of Americans, Wednesday learned that the Biden administration has a plan moving forward with student loan forgiveness can spark a sense of relief – then lots of questions.

The government has offered some surprising responses, though time will tell how smoothly the cancellation goes between the US Department of Education, lenders and millions of borrowers.

For now, here’s what we know.

The ministry said the app will be available before the end of the year, and Borrowers can register on their website for updates about the process.

The department also said it had income data for nearly 8 million borrowers. These people can be canceled automatically.

That’s because the American Rescue Plan 2021 worked student loans are tax free through 2025 – and the law also includes Biden’s pardon, according to a flyer from the White House.

However, you may still be subject to state taxes, says higher education expert Mark Kantrowitz.

Some states automatically follow federal rules, but others may count forgiven balances as income, which means you can still have bills. The amount “could be equivalent to a few student loan payments,” Kantrowitz said.

If you’re not sure, contact your local tax professional for an estimate before filing your state tax return.

In addition to Biden’s announcement about student loan forgiveness, he said he would payment pause extension for federal student loans through December 31. Payments will resume January 2023.

This is the seventh extension of the pandemic relief policy started under the Trump administrationand will probably be the last one.