FAQ: The Biden Administration’s Student Loan Debt Relief Plan

The Biden Administration’s Student Loan Debt Relief Plan plan can forgive up to $20,000 for qualified borrowers. You might be wondering if any of that forgiveness applies to your loans, and what happens next. 

Here’s an overview of the plan, who qualifies, and what the next steps are:

Is the repayment pause extended?

Yes. The Biden administration has extended the repayments pause for one last time, pushing the next payment due date to January 2023. During this time, the interest rate remains at zero percent. This extension applies to anyone with federal student loans.

Do I qualify for The Biden Administration’s Student Loan Debt Relief Plan?

The U.S. Department of Education will forgive up to $20,000 for Pell Grant recipients, and up to $10,000 for non-Pell Grant recipients. There are a few qualification for this relief: 

• Your annual income must be below $125,000 for individuals, or $250,000 for married couples or heads of households. 2020 or 2021 income applies, but 2022 income does not.
• You must have federal loans; private loans don’t apply.
• Your loans must have been disbursed as of June 30, 2022.

This Biden Administration’s Student Loan Debt Relief Plan also applies to parent loans and graduate school loans.

Do I have to pay taxes on the canceled debt?

You do not have to pay federal taxes on the canceled debt. Some states, however, might treat the loan forgiveness as income to borrowers. Check your state’s laws so you’re not surprised at tax time.

Do I qualify for a refund if I made student loan debt payments during the repayment pause?

Yes. If your income falls within the income limits for The Biden Administration’s Student Loan Debt Relief Plan, then you may be eligible for a refund from the loans you paid off during the repayment pause that started in March of 2020. Contact your loan servicer for more information.

If only a portion of my debt will be forgiven, how will my payments be adjusted?

Your payments will be adjusted accordingly, but some of this is still being sorted out. Wait for further guidance from your loan servicer. 

How to Apply for Student Loan Forgiveness

If you qualify for The Biden Administration’s Student Loan Debt Relief Plan, there will be an application process starting this October. You can apply up until Dec. 31, 2023. 

Make sure your contact information is up to date with your loan servicer so they can inform you of the next steps, and sign up here to be alerted when applications are open. It should take less than six weeks for your loans to be forgiven by whatever amount you’re eligible for.

Note: Payments will resume in January 2023. So if you’re eligible for forgiveness, try to have your application in by early November so your forgiveness can be applied before payments kick in again.

Can I qualify for the Biden Administration’s Student Loan Debt Relief Plan if I’m part of the Public Service Loan Forgiveness (PSLF) program?

Yes, public service workers who meet the requirements are still eligible to receive full student loan forgiveness. 

NOTE: Last fall, the government offered a limited PSLF waiver to allow borrowers to receive a credit for repayments they made in the past that would not normally qualify for the program. (We covered that waiver in more detail here.) 

There have been calls to extend the waiver, but as of now, it expires on Oct. 31, 2022. If you qualify, make sure you reach out before that deadline to receive your credit.

What if I don’t qualify for student loan forgiveness?

Even if you don’t qualify for this The Biden Administration’s Student Loan Debt Relief Plan, you still might be eligible for updated income-driven repayment plans, loan consolidation, or refinancing.

If you’re paying off medical school loans, there are several loan forgiveness programs that might apply to you.

Finally, if you’re dealing with a significant amount of student debt, here are some tips to help you create a payoff plan:

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