Oct. 31 Federal Update: Department of Education Announces Permanent Changes to the PSLF Program
Federal student loans continue to make news in Washington, DC. On Oct. 25, 2022, the Department of Education, led by Secretary of Education Miguel Cardona, announced an executive action to change and streamline the Public Service Loan Forgiveness (PSLF) Program permanently. This executive action is designed to work in tandem with regulatory changes, set to go into effect in July 2023.
Starting on Nov. 1, 2022, the Department of Education will allow borrowers with 20 years (240 months) or 25 years (300 months) of payments to start receiving loan discharges through these changes. Borrowers who applied for PSLF before Oct. 31, 2022, and reached 120 payments due to the deferment and forbearance changes, will also receive loan discharges. The Department of Education will continue implementing federal loan discharges for borrowers who reach the forgiveness threshold in the months after November 2022.
In July 2023, the Department of Education will automatically apply the same payment count treatment to all Direct and Department-managed Federal Family Education Loans (FFEL) for borrowers who do not otherwise reach the number of months necessary for forgiveness.
A complete list of the improvements can be found in this fact sheet. The regulations will be published in the coming days and will go into effect on July 1, 2023.
Coverage for Medicaid and Children’s Health Insurance Program Expanded (CHIP) Expanded
On Oct. 27, the Centers for Medicare & Medicaid Services (CMS) announced that more than half of all U.S. states had taken steps to expand the coverage period for Medicaid and Children’s Health Insurance Program (CHIP) coverage to 12 months after pregnancy. This announcement comes after the states of Pennsylvania and Georgia took the necessary steps to expand Medicaid and CHIP coverage this Fall, a move that will make an additional 57,000 individuals in those two states eligible for expanded healthcare. A signature plank of the Biden Administration’s domestic policy agenda has revolved around Maternal & Fetal Health, as outlined more fully in the Administration’s Maternal Health Blueprint. The ability for individual states to expand eligibility criteria for their Medicaid and CHIP programs is a direct result of provisions found in the American Rescue Plan, signed into law by President Biden in March of 2021. An estimated 418,000 Americans across 26 states and the District of Columbia now have expanded access to postpartum coverage due to the 2021 American Rescue Plan.
IRS Warns Nonprofits of Tax Savings Schemes
The Internal Revenue Service (IRS), on Oct. 19, advised businesses, including nonprofits, to be careful of individuals or groups who erroneously advise organizations to improperly claim the Employee Retention Credit (ERC) on their organization tax return. Some third parties are taking improper positions related to taxpayer eligibility for and computation of the credit. The groups and individuals providing the fraudulent advice have been known to charge non-profits costly upfront fees. The IRS advises non-profit organizations and businesses to remain cautious about tax savings schemes and plans. The organization is always responsible for the information reported on its tax returns. Improperly claiming the ERC could result in taxpayers being required to repay the credit along with penalties and interest.
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