When President Biden announced his student-loan forgiveness plan last month for individuals earning less than $125,000, borrowers with incomes just over the limit wondered if there was a way to make the cut. In most cases, the answer was no.
There is an exception: Some taxpayers with self-employment income who requested an extension to file their 2021 returns may be able to reduce their income just enough to get the $10,000 in federal-debt forgiveness, tax professionals say. Pell grant recipients are eligible for forgiveness of up to $20,000. The debt forgiveness program applies to individual borrowers with adjusted gross income of under $125,000, or under $250,000 for married couples filing jointly, based on tax years 2020 or 2021. (That is Line 11 on the 1040 individual income tax return.)
