Incorrect emails, California taxes and court: What’s going on with student debt relief plans?

Student debt relief is in limbo for millions of California borrowers.

Since President Joe Biden announced his plan in August, the action has been received with opposing opinions; this has stalled the advancement for 45 million borrowers to receive debt relief of up to $20,000.

In California alone, there are roughly 3.5 million eligible borrowers who would benefit from student debt forgiveness. There are a lot of moving parts to debt relief, which is why we are answering the most pressing questions surrounding the status of Biden’s student debt relief plan.

Here’s what we know so far:

What’s the timeline for student debt relief?

Student debt relief is in the hands of the Supreme Court.

Justices are set to decide if Biden’s student debt plan “exceeds the Secretary’s statutory authority” and oral arguments are set to take place in February.

Have student debt relief applications been approved?

Applications are still on hold.

If you submitted your application for debt relief, you may have received an email from the Department of Education in November.

On Nov. 22 and 23, 9 million borrowers received an email with an inaccurate subject line from the department saying they had been approved for loan forgiveness. It was supposed to say their application had been received.

Accenture Federal Services, a government contract, is responsible for the mistake, CBS News reported. The service told McClatchy News that it plans to send a corrected email to borrowers.

Can I still apply while it’s in court?

Student debt relief applications have been blocked by the the Supreme Court for now.

When you visit the Student Aid application site, you won’t have access to the application, but you can subscribe to a newsletter to stay up to date with email updates on the relief.

Will California tax student debt recipients?

In November, Gavin Newsom “called for early action to waive taxes on forgiven student loan debt”. Though there has not been a consensus on whether student debt relief will pass, Newsom says he “looks forward to working closely with the legislature to get this done through early action.”

Under California law, it was possible that the debt relief could be taxed if legislators didn’t take steps.

Do I continue to make payments on my student debt?

The payment freeze on student loans has been extended to at least June 30, 2023.

According to the Federal Student Aid website, the pause has been implemented on payments until “debt relief program or the litigation is resolved.” If student debt relief is blocked, payments will restart 60 days after the June 30 deadline.