How the relief package impacts university aid and loan payments
The $ 900 billion economic relief package passed by Congress includes several provisions that will benefit students, their families and student loan borrowers, but it does not extend the moratorium on federal student loan payments beyond their expiration date of Jan. 31, 2021.
A six-month moratorium on federal student loan payments was included in the $ 2.3 trillion coronavirus aid, relief and economic security mega law passed in March and extended by the White House to two times. He now leaves the decision to extend it further to the newly elected president, Joe Biden.
The latest Economic Assistance Act expands another provision of the CARES Act to help borrowers of student loans that otherwise would have expired at the end of this year: the provision allowing tax-exempt payments from employers to borrowers of student loans up to a maximum of $ 5,250.
Employees do not have to report these payments as income on their tax returns and the payments are exempt from FICA payments from employees and employers until the end of 2025.
A changing FAFSA
The new legislation also simplifies the FAFSA (Free Application for Federal Student Aid), which students and their families must file to qualify for college financial aid.
In addition, the legislation extends eligibility for both Federal Financial Aid and Pell Grants. He also forgives more than $ 1 billion in federal loans held by historically black colleges and universities.
When the new FAFSA goes into effect in July 2023, it will have just 36 questions, up from 108 currently, will rename the expDesignated Family Contribution (CFC) as a Student Aid Index and will increase the amount of income that is shielded from consideration when awarding financial aid to students and their families.