@IamWesty12 as mentioned above yes it is 20-25 years of payments , now with the covid forebodance these past 2 years do not count. Now if you still have the correct amount of payments, I would probably recommend getting the 10k off your principal and then apply for the loan forgiveness of the rest of the amount that way it reduces the amount of taxable income for you. Now - this is off assumptions though I still do not know all the details of this new Biden plan but thats the best advice I can give with what I know right now
@teekay629 wrote:From what I understand, it is 20 years of payments, not just having the loans. If they are currently in default and you are not paying on them, I do not think it would count. It sort of sounds like it is PSLF, but for all.
Do you currently have qualifying employment for PSLF? If not, then I do not think there is a difference in getting them taken out of default and current unless it does not count for discharge. It seems to be unclear right now how those that are defaulted fall under the announcement yesterday.
@teekay629 thank you for your help and reply. Yes, I have worked at the same large hospital for the past 14 years, Dartmouth Hitchcock Health. My loans are in default and I have not paid them. At risk of sounding dumb, does the fact that I have qualifying employment for PSLF but have not been in repayment mean anything further? I know getting them consolidated and into paying mode again that would help me getting off CAVIRS and being able to use either FHA or conventional mortgage routes. Other than that, it seems to me at this point that by spring either way the bulk of these loans will be gone???
Starting Score: 461
@mfinsmi1 wrote:@IamWesty12 as mentioned above yes it is 20-25 years of payments , now with the covid forebodance these past 2 years do not count. Now if you still have the correct amount of payments, I would probably recommend getting the 10k off your principal and then apply for the loan forgiveness of the rest of the amount that way it reduces the amount of taxable income for you. Now - this is off assumptions though I still do not know all the details of this new Biden plan but thats the best advice I can give with what I know right now
@mfinsmi1 ok so I must have misinterpreted that statement then. I do not have any counted monthly payments toward these loans at all so the 20-25 years is only if within those 20-25 years I had been making payments on the loans, yes? Again, to all, I am sorry if I am asking inappropriate or obvious questions, this stuff truly makes my head spin. And that is coming from someone who works in a high level OR and sees some crazy crap, lol. My head hurts more after trying to wrap my brain around all this then it does after standing through a 12 hour surgery w/o a bathroom break!!!! Thanks again~
LOL all good - im an accountant yet i hate taxes and loans and all this nonsense.
BUT if you google this:
How does the 20 year student loan forgiveness work?
After monthly payments are made for a set number of years — usually 20 — any remaining balance is forgiven. (The balance is taxable as income.)
Due to the American Rescue Plan any student loan forgiveness is not considered taxable income through 2025 (at least this is my understanding of it).
I believe your best bet is to start rehabilitating the loans out of default status. When I rehabilitated my loans in 2015, I had to pay, I think, 9 months at $68 per month to start. Near the end of the 9 months, the loans were picked up by a federal loan service and my monthly payments jumped to $280 per month on a ten year plan. With the payment pause, you may not have to pay anything monthly until payments resume in January (don't hold me to that...I'm not sure how the rehabilitation will work with the current Covid policies in place).
I would start by contacting whoever holds your loans now and ask how to go about rehabilitating them. I found this article which may help (or just muddy the waters more 🤓)
https://fsapartners.ed.gov/sites/default/files/2022-08/FreshStartFactSheet.pdf
@Gidgetmom wrote:Due to the American Rescue Plan any student loan forgiveness is not considered taxable income through 2025 (at least this is my understanding of it).
I believe your best bet is to start rehabilitating the loans out of default status. When I rehabilitated my loans in 2015, I had to pay, I think, 9 months at $68 per month to start. Near the end of the 9 months, the loans were picked up by a federal loan service and my monthly payments jumped to $280 per month on a ten year plan. With the payment pause, you may not have to pay anything monthly until payments resume in January (don't hold me to that...I'm not sure how the rehabilitation will work with the current Covid policies in place).
I would start by contacting whoever holds your loans now and ask how to go about rehabilitating them. I found this article which may help (or just muddy the waters more 🤓)
https://fsapartners.ed.gov/sites/default/files/2022-08/FreshStartFactSheet.pdf
@Gidgetmom thank you for your response, I appreciate it greatly! If I rehab these loans, with interest to date my balance is $23K, I do understand that for ~9 months I pay a set amount and after that they are considered in good standing and then so on and so forth for the 10 year payment plan. My question is, say I do this. How does the new forgiveness program altar this if I am in fact eligible to receive the full $20K in relief (I had PELL grants and my income for a single mom of 3 is w/in the guidelines) If I consolidate/rehab these loans and move forward, say when they issue out the forgiveness will they just take the $20k and subtract it from the balance of the now consolidated loans and then I have whatever monthly payment for the much lower amount? I am thinking if I do consolidate/rehab and get back on a good footing then I get the full $20K the balance would then roughly be under 4K because it would only be interest left. I know I never ask a simple small question. I just want to make sure I am not offsetting one problem by creating another one. Also these loans are all from the year 2000 and have long since been off my credit reports. What happens if I consolidate these 20 year old student loans? Will it effect my credit reports, will it add these tradelines back onto my credit reports dating back 20+ years? Again, my ultimate goal is being able to buy my first home for children and myself. Immediately after being able to become a homebuyer, my next goal would be in continuing on my credit journey that I have worked so hard for. I find myself apologizing again for all these scenarios, but as you can tell, advice is very welcoming to me!!!
@Gidgetmom wrote:Due to the American Rescue Plan any student loan forgiveness is not considered taxable income through 2025 (at least this is my understanding of it).
I believe your best bet is to start rehabilitating the loans out of default status. When I rehabilitated my loans in 2015, I had to pay, I think, 9 months at $68 per month to start. Near the end of the 9 months, the loans were picked up by a federal loan service and my monthly payments jumped to $280 per month on a ten year plan. With the payment pause, you may not have to pay anything monthly until payments resume in January (don't hold me to that...I'm not sure how the rehabilitation will work with the current Covid policies in place).
I would start by contacting whoever holds your loans now and ask how to go about rehabilitating them. I found this article which may help (or just muddy the waters more 🤓)
https://fsapartners.ed.gov/sites/default/files/2022-08/FreshStartFactSheet.pdf
@Gidgetmom you have created a monster, lol. I am reading from the link you provided above and I am def thinking about going this route, like now. Should I wait to see how the dust settles overall w/ all these programs or should I get these loans out of default regardless? With them being so old, I am just so worried about bringing more trouble today by doing this. Further, on page 3 this paragraph below that i have copied and pasted, it states that on or about July 10, 2022 ED took steps to remove many "eligle defaulted loans" off of the CAIVRS list that I am on, which I found out when I first applied for a FHA loan last summer. Can you or anyone elaborate on this paragraph? In particular, what does it mean when it states ED removed default notations in CAIVRS for borrowers w/ eligle defaulted federal student loans? I am wondering who do they mean by that statement, is it anyone on that list who has loans that can be rehabbed such as me or does that mean people who had defaulted loans and they rehabbed them, therefore they were removed from that list?
"Currently, borrowers with defaulted loans are reported to CAIVRS. Lenders, particularly those
originating government-backed loans, deny loan applicants if they are flagged in CAIVRS. As
of July 10, 2022, ED removed default notations in CAIVRS for borrowers with eligible defaulted
federal student loans."
I just want to know the best next step for me with all the intangibles noted. I seriously do not think the ED would just remove my name from this list due to my loans being so old to bear any weight??? Thank you AGAIN 
@IamWesty12 wrote:
@Gidgetmom wrote:Due to the American Rescue Plan any student loan forgiveness is not considered taxable income through 2025 (at least this is my understanding of it).
I believe your best bet is to start rehabilitating the loans out of default status. When I rehabilitated my loans in 2015, I had to pay, I think, 9 months at $68 per month to start. Near the end of the 9 months, the loans were picked up by a federal loan service and my monthly payments jumped to $280 per month on a ten year plan. With the payment pause, you may not have to pay anything monthly until payments resume in January (don't hold me to that...I'm not sure how the rehabilitation will work with the current Covid policies in place).
I would start by contacting whoever holds your loans now and ask how to go about rehabilitating them. I found this article which may help (or just muddy the waters more 🤓)
https://fsapartners.ed.gov/sites/default/files/2022-08/FreshStartFactSheet.pdf
@Gidgetmom thank you for your response, I appreciate it greatly! If I rehab these loans, with interest to date my balance is $23K, I do understand that for ~9 months I pay a set amount and after that they are considered in good standing and then so on and so forth for the 10 year payment plan. My question is, say I do this. How does the new forgiveness program altar this if I am in fact eligible to receive the full $20K in relief (I had PELL grants and my income for a single mom of 3 is w/in the guidelines) If I consolidate/rehab these loans and move forward, say when they issue out the forgiveness will they just take the $20k and subtract it from the balance of the now consolidated loans and then I have whatever monthly payment for the much lower amount? I am thinking if I do consolidate/rehab and get back on a good footing then I get the full $20K the balance would then roughly be under 4K because it would only be interest left. I know I never ask a simple small question. I just want to make sure I am not offsetting one problem by creating another one. Also these loans are all from the year 2000 and have long since been off my credit reports. What happens if I consolidate these 20 year old student loans? Will it effect my credit reports, will it add these tradelines back onto my credit reports dating back 20+ years? Again, my ultimate goal is being able to buy my first home for children and myself. Immediately after being able to become a homebuyer, my next goal would be in continuing on my credit journey that I have worked so hard for. I find myself apologizing again for all these scenarios, but as you can tell, advice is very welcoming to me!!!
From the article I posted here...
"Due to the Fair Credit Reporting Act, loans that have been delinquent for more than seven years generally do not appear on credit reports produced by credit reporting agencies. To ensure the maximum opportunity for borrowers with eligible defaulted federal student loans to get a fresh start, ED will
• delete reporting about loans that have been delinquent for more than seven years, even if the borrower enrolls in a repayment plan through the Fresh Start initiative;"
I read this as the loans will not reappear on your credit report even while in repayment. At the end of the article it mentions the steps you need to take to participate in the Fresh Start initiative. Even if they do show up after rehabilitation, they will be in a positive status and adding to your overall age of credit history. The only "ding" (and I can't really call it an issue as my scores have rebounded into the 800's) I get on my reports is "balance compared to original loan". My loans are from 1992 and I had been in and out repayment/default until 2015. I was lucky to get them rehabilitated, as I had started the rehabilation process prior but never saw it to completion. The loans help with my average age of credit and my 100% on time payment.
If you are eligible for the $20,000 forgiveness, I would think it's deducted from your total and you will still be responsible for the balance. But, the balance could be paid through an IDR and have really low payments or none at all; or, you may even be able to get balance forgiven under PSLF. In order to receive PSL forgiveness, everything I've read say the loans have to rehabilitated to qualify.