Student Loan Debt Forgiveness: What You Need To know

Last month, President Joe Biden announced his plan to forgive student loan debt for some student loan borrowers. And, ever since then, student loan borrowers (such as myself) have had a lot of questions. Who qualifies? How is this going to work? How much of my debt will be forgiven? 

This impacts a lot of people. 43 million Americans have outstanding student loans, about 92% of those people have federal loans of some kind and, all told, we owe about $1.6 trillion. Many of us have had some leeway the last couple of years because of pandemic forbearance on all of our loan repayments, but that’s set to expire for most borrowers come December 31, 2022. Before that rolls around, most of those 43 million people could get relief in the form of student loan forgiveness—either reducing the amount of debt we hold or absolving it entirely, depending on how much is owed. 

Off the top, we know this is a one-time student loan debt relief and The U.S. Department of Education changed this week exactly which loans would be eligible. Here’s what we know. 

Who is eligible for student loan forgiveness? 

Borrowers are eligible if their income on their 2020 or 2021 tax return is either less than $125,000 for individuals or less than $250,000 for households. For dependent students, their eligibility is based on their parents’ income. Loan forgiveness could come in the form of up to $20,000 in debt relief for Pell Grant recipients or up to $10,000 in debt relief for those who did not receive a Pell Grant.

The Biden administration recently changed which federal student loans qualify for the debt relief program. Based on the most recent change they are: 

  • Undergraduate and Graduate Direct Loans
  • Parent PLUS and Grad PLUS Loans
  • Consolidation Loans (underlying loans disbursed on or before June 30, 2022)
  • Federal Family Education Loan (FFEL) Program Loans held by The U.S. Department of Education (ED)
  • Perkins Loans held by ED
  • Defaulted loans (ED-held or commercially serviced Subsidized, Unsubsidized, parent PLUS, grad PLUS; and Perkins held by ED)

Borrowers can check with their loan service provider if their loans are direct loans or if their lender is the U.S. Department of Education. 

People who made payments on their student loans during the pandemic forbearance will also be eligible for a full or partial refund for the payments that they made during that time. 

How will student loan forgiveness work? 

Student loan borrowers will need to file an application for the debt relief. The U.S. Department of Education will post an online application sometime next month, October 2022. Once the application is submitted, the Department of Education will review it, determine your eligibility and work with the loans’ service or services to process the debt relief. Federal student loans borrowers will have until December 31, 2023 to apply. 

What do student loan borrowers need to do before then?

There’s not a lot to do right now, honestly, but wait and see. It’s too late to consolidate loans if borrowers needed to do that to qualify for forgiveness. Any updates will be posted at studentaid.gov where student loan borrowers can also login to or create an FSA account to track their loans. They can also make sure their loan servicer has their most current contact information.

There are some lawsuits to keep an eye on that could throw all of this out the window, depending on how the ruling goes. This week, Attorneys General from Missouri, Arkansas, Kansas, Nebraska and South Carolina filed a lawsuit against the Biden administration in a Missouri federal court. The lawsuit alleges that the student loan forgiveness could hurt lenders of privately held student loans because it encourages borrowers to consolidate their loans with the federal government (denying the private loan lenders of repayments). The change in eligibility, however, excluding privately held student loans that have not already been consolidated by September 29, 2022, seems to have been done to weaken that legal argument. 


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Christie Porter
Christie Porterhttps://christieporter.com/
Christie Porter is the managing editor of Salt Lake Magazine. She has worked as a journalist for nearly a decade, writing about everything under the sun, but she really loves writing about nerdy things and the weird stuff. She recently published her first comic book short this year.

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