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With the fate of the Biden administration’s sweeping student loan forgiveness plan uncertain and headed to the Supreme Court, borrowers in New York state may have another relief option.
The ‘Get On Your Feet’ loan forgiveness program, launched in 2015, is intended to “invest in recent college grads with student loan debt who chose to invest their future in New York,” said Angela Liotta, public information officer and director of communications at the New York State Corporation for Higher Education Services.
Under the program, certain in-state residents may be eligible for student loan forgiveness for up to 24 months of payments.
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How the student loan forgiveness plan works and when to apply
There are about 2.5 million people in New York with federal student loan debt, who together owe nearly $100 billion, according to higher education expert Mark Kantrowitz.
Here’s what borrowers need to know about the program.
You must live and have attended school in New York.
State relief is available to legal residents of New York who have lived in the state for 12 consecutive months or more. If you are employed, you must also be working for the state.
Among other requirements, applicants must have graduated from a New York high school or received a New York State high school equivalency diploma, as well as have attended a college or university in the state and obtained their undergraduate degree. in December 2014 or later.
You must also apply for the program within two years of graduation.
An income defined repayment plan is required
To qualify for the program, borrowers must be enrolled in an income-driven repayment plan, in which their payments are generally capped at 10% of their discretionary income, such as the Pay as You Earn (PAYE) plan, the Pay As You plan the Earn (REPAYE) plan or the Income Based Repayment (IBR) plan.
Eligibility is limited by income, type of loan
The program excludes those with an adjusted gross income of more than $50,000 per year.
Not all student loans qualify for state relief.
Under the direct loan program, subsidized and unsubsidized loans are eligible. Federal Family Education Loans (FFELs) may not qualify, although you may be able to consolidate these loans into the Direct program. Private student loans are not eligible.
Loans taken during graduate school, meanwhile, are also typically excluded from state forgiveness, and to qualify for the program, you must have no more than a bachelor’s degree at the time you apply.
Not sure what type of student loans you have? You can check at Studentaid.gov.
Up to 24 months of student loan payments available
Under the Get On Your Feet loan forgiveness program, New York State can cover your entire student loan bill for up to 24 months under a qualifying repayment plan based on income.
The state makes payments directly to your student loan servicer.
Loan forgiveness could have tax implications. Recipients will receive a 1099 form from the state and are encouraged to contact a tax professional, the IRS, or the New York State Department of Taxation and Finance for more information.
Federal student loan payments have been on hold since March 2020, due to a pandemic-era policy, and will remain on hold until litigation over the Biden administration’s student loan forgiveness plan is resolved, or until end of August, whichever comes first.
Although you can apply for the Get on Your Feet loan forgiveness program now, applications will be reviewed for eligibility once federal student payments resume, Liotta said. Still, if you think you qualify, it’s a good idea to apply for relief now because of the requirement that you apply within two years of graduation.
Don’t qualify for this program? New York has a list of other state and federal student loan forgiveness programs.