When Will Student Loan Forgiveness Start?

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President Joe Biden announced yesterday that his administration would:

  • extend the Trump-related pandemic payment pause past the midterm elections until the end of the year.
  • knock $10 to $20 thousand off the balances of millions of student loan borrowers.

Related: When Will Student Loan Payments Resume?

The White House estimates that about 8 million Americans will get this debt relief immediately. In some cases, borrowers will need to apply for it once the Department of Education releases a simple application later this year.

Ahead, learn more about the president’s plan for mass debt cancellation, including who qualifies, when it will start, and more.

*I will update this article in the coming days and weeks as more details become available.

Who’s eligible for student loan debt forgiveness?

You qualify for Biden’s student loan forgiveness plan if your loans are owned by the Education Department and:

  • you’re single, and your adjusted gross income on your tax return for 2020 or 2021 was less than $125 thousand.*
  • you’re married, file taxes jointly, and your adjusted gross income on your tax return for 2020 or 2021 was less than $250 thousand.*

If you ever received a Pell Grant and meet these income requirements, you also qualify for an extra $10 thousand in cancellation — this will bring you to a  total of $20 thousand in forgiveness.

Here are a few top-level statistics about the student loan debt relief opportunity:

  • 41 million borrowers are eligible.
  • 25 million people received Pell Grants and are eligible for $20 thousand in forgiveness.
  • 20 million, including 3.8 million Black borrowers, could have their entire debt canceled.
  • 25 million will still hold debt after this forgiveness is applied.

This keeps with the Biden administration’s goal to bring targeted relief to low and middle-income borrowers. By allowing borrowers who received Pell Grants to get an additional $10 thousand in forgiveness, the federal government is helping to narrow the racial wealth gap. An Urban Institute study showed that Black borrowers are twice as likely to be Pell Grant recipients than their white peers.

Learn More: Biden Approves $10-$20k in Loan Forgiveness

*This information about which tax years will be looked at is being reported by the NY Times. The Education Department has yet to provide clarity.

Who isn’t eligible for debt cancellation?

Only federal student loan debt is eligible for this latest loan round of loan forgiveness. Specifically, only loans held by the Education Department qualify. This includes Parent PLUS Loans and Grad PLUS Loans. 

Private student loans aren’t eligible. Neither are many older federal student loans that are owned by schools and commercial entities.

If you had to keep making your monthly payments throughout the coronavirus-related moratorium that began in March 2020, your loans aren’t owned by the Education Department.

When will student loan forgiveness be reflected on borrowers’ loan balance?

Millions of eligible federal student loan borrowers will see the forgiveness reflected on their accounts within the next several weeks. If you’ve already enrolled in an income-driven repayment plan and have submitted income information during the pandemic, your student loan servicer and the Education Department know how much you earn, and you shouldn’t need to do anything else.

Some borrowers might not see this automatically — these individuals will need to wait until after the Education Department sets up a “simple application process for borrowers to claim relief.” The form will be available later this fall, according to a White House statement.

Keep an eye out for guidance from your student loan servicer and Federal Student Aid.

What’s the first thing I need to do if I qualify for loan cancellation?

Make sure that the Education Department and your student loan servicer have updated contact information for you so that they can notify you of any guidance. Confirm that your postal address, email address, and mobile phone number are listed accurately. You can update this info on studentaid.gov.

You have two options to find out who your loan servicer is:

  • Visit your account dashboard and scroll down to the “My Loan Servicers” section, or
  • call the Federal Student Aid Information Center at 1-800-433-3243.

Learn More: Who Do You Contact If You Have Questions About Repayment Plans?

How does this cancellation overlap changes to other loan forgiveness programs?

President Biden’s student debt relief plan should happen independently of any debt forgiveness process you’re pursuing.

If you work full-time for the government or a nonprofit and are pursuing the Public Service Loan Forgiveness Program, you’ll still get PSLF plus the $10-20 thousand cancellation.

Related: How to Apply for the PSLF Waiver

The same is true if you’re working towards student loan repayment forgiveness.

Learn More:

Bottom Line

Both Democrats and Republicans have pointed to major flaws in the federal student loan system, many of which come into play as soon as students borrow undergraduate loans. Biden’s announcement is well timed: Extending the payment pause a final time and providing targeted forgiveness brings needed relief to borrowers while minimizing costs to taxpayers.

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I'm a student loan lawyer that helps people like you with their federal and private student loans wherever they live.

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