Student Loan Forgiveness: What You Need to Know

Posted on: September 6, 2022
The information provided on this post does not, and is not intended to, represent legal advice. All information available on this site is for general informational purposes only. If you need legal help, you should contact a lawyer. You may be eligible for our free legal services and can apply by calling our Covid Legal Hotline at 1-844-244-7871 or applying online here.

Updated 10/12/2022

The Biden administration announced a three-part plan to help those with federal student loan debt. What happens next?

Extended Pause on Loan Repayments

The current pause on federal student loan repayment has been extended one final time through December 31, 2022. Borrowers should expect to resume making federal student loan payments in January 2023.

Changes to the Student Loan System

The Biden administration is proposing changes to the student loan system so that it is more manageable in the future. These include cutting monthly undergrad loan payments in half, increasing the number of Pell Grants available, and changing the rules for Public Service Loan Forgiveness (PSLF) so that it is more accessible to borrowers.

What is the Student Loan Relief Plan?

The U.S. Department of Education (ED) in August 2022 announced that the Student Debt Relief Plan that includes one-time student loan debt relief targeted to low- and middle-income families.

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

What types of loans are eligible for this relief?

The following types of federal student loans with an outstanding balance as of June 30, 2022, are eligible for relief:

  • William D. Ford Federal Direct Loan (Direct Loan) Program loans:
    • Subsidized loans
    • Unsubsidized loans
    • Parent PLUS loans
    • Graduate PLUS loans
  • Federal Family Education Loan (FFEL) Program loans held by ED or in default with your FEEL loan administer
  • Federal Perkins Loan Program loans held by ED
  • Defaulted loans (includes all Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)

However, check with your student loan servicer to make sure your particular loan qualifies.

Consolidation loans are eligible for relief, as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022.

How do I apply for this?

Step 1: Check if you're eligible

You're eligible for student loan debt relief if in 2020 or 2021 you:

  • Filed your federal taxes as an individual or if married you filed separately AND your annual federal income was below $125,000; or
  • Filed your federal taxes as married and jointly file or filed as head of household AND your annual federal income is below $250,000.

If you qualify, then you will get:

  • $20,000 in debt relief: If you received a Pell Grant in college and meet the income test above, you'll be eligible for up to $20,000 in debt relief or
  • $10,000 in debt relief: If you did not receive a Pell Grant in college and meet the income test above, you'll be eligible for up to $10,000 in debt relief.

Step 2: Prepare

Here's what you can do to get ready and to make sure you get our updates:

  • Log in to your account on StudentAid.gov and make sure your contact info is up to date.  ED will send you updates by both email and text message, so make sure to sign up to receive text alerts. If it's been a while since you've logged in, or you can't remember if you have an account username and password (FSA ID), we offer tips to help you access your account.
  • If you don't have a StudentAid.gov account (FSA ID), you should create an account to help you manage your loans.
  • Make sure your loan servicer has your most current contact information so they can reach you. If you don't know who your servicer is, you can log in and see your servicer(s) in your account dashboard.

Step 3: Submit your application (when available)

The application will be available online by early October 2022.

You will be emailed when the application is available. You'll have until Dec. 31, 2023, to submit your application.

For all information on this process, visit: https://studentaid.gov/debt-relief-announcement/one-time-cancellation

How do find out if I qualify for the Pell Grant forgiveness?

Federal Pell Grants typically are awarded to undergraduate students with low or moderate income.  Most borrowers can log in to StudentAid.gov to see if they received a Pell Grant. You will get information about the aid you received, including Pell Grants, on your account dashboard and your “My Aid” pages.

If you did receive Pell Grant(s), the ED will verify this with your application to make sure you will receive up to the full benefit of $20,000 in relief if you meet the income tests.

ED has data on all borrowers who received a Pell Grant.  If you received a Pell Grant prior to 1994, that information won't display in StudentAid.gov, but you'll still receive the full benefit.

Student Debt Relief Scams

Some people are trying to rip borrowers off.  Some scams and how to avoid them are:

  • You will be asked for money to help you fill out an application. There is no fee for this application
  • Never give any personal information or account passwords to anyone
  • Only trust emails from ED which will be from noreply@studentaid.gov

More info on how to avoid student loan scams: https://studentaid.gov/resources/scams

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