LANSING, Mich. (Michigan News Source) – With the rollout of a Beta version of the U.S. Dept. of Education’s application for student loan debt relief over the weekend, comes a warning from Michigan’s AG Dana Nessel telling
residents of Michigan to beware of scammers who want to take advantage of the situation.

Nessel is urging Michiganders to visit the Federal Student Aid website and/or their loan servicer directly and not to provide personal or financial information to unsolicited emails, phone calls or texts that may arrive pretending to be from the federal government or a company who claims to be able to help you with obtaining your relief. She also instructs debtors not to pay anyone for assistance in obtaining their loan forgiveness or to give out their FSA ID to anyone.

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In addition, Nessel urges those seeking help not to be rushed and to take their time and check out the program. “The opportunity for debt forgiveness is also an opportunity for scammers to try and gain access to your personal and financial information,” said Nessel.”It is important to remember that the federal government will not proactively email or text you to take advantage of this program. Residents should rely on legitimate sources for information and not fall for messages that create a sense of urgency or demand financial information.”

The Biden administration has decided that the U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for households.

The debt relief applies to loan balances before June 30, 2022. Although the loan relief won’t be taxed at the federal level, some states may be taxing the debt relief.

However, Michigan won’t be one of them. At the end of September, Michigan Gov. Gretchen Whitmer announced that Michiganders will not have to pay state tax on their federal loan forgiveness. She said in a statement, “Tax-free student loan forgiveness could benefit up to 1.4 million Michiganders and help keep money in their pockets.

Michigan PSLF (Public Service Loan Forgiveness) recipients who serve their community will not be taxed for any amount of student loan relief they have received. In Michigan, we value the hard work that all of our citizens put in to get the education they need. I will work with anyone to keep lowering the cost of higher education and help students not go into debt in the first place.”