President Biden’s student loan forgiveness will relieve federal student loan debt for qualifying borrowers. Now, it’s just a matter of figuring out which loans are eligible for cancellation and when student loan forgiveness will materialize on borrowers’ accounts.
While detailed information about student loan forgiveness is yet to be released, here’s what we know about when your loan amounts will be wiped out.
Who Qualifies for President Biden’s Student Loan Forgiveness?
Pell Grant recipients qualify for $20,000 in loan forgiveness, while non-Pell Grant recipients qualify for $10,000. Loan cancellation will be capped at the borrower’s amount of outstanding debt.
Only federal loans that were suspended from the COVID-19 forbearance in March 2020 qualify for student loan forgiveness. The following loans are eligible for student loan forgiveness:
- Direct Loans
- FFEL Loans held by the federal government
- Perkins loans held by the federal government
- Direct, FFEL, Perkins, and HEALs loans in default
To determine whether your loans qualify for student loan forgiveness, log in to your Federal Student Aid account and look for the ‘My Loan Servicers’ tab. If the loan servicer’s name is ‘DEPT OF ED’, the loan is held by the federal government and qualifies for student loan forgiveness.
For borrowers who have commercially held federal student loans, fret not. According to a White House spokesperson, the Education Department “will work with private lenders to ensure that commercially held federal student loan borrowers can also benefit from relief, including privately held FFEL loans, Perkins, and Health Education Assistance Loans that are consolidated into the Direct Loan program.”
(Commercially held federal loans are loans that were issued by private lenders, but were guaranteed by the federal government.)
If you do not meet the income requirements, are not a federal student loan borrower, or do not have an eligible federal loan, you will not qualify for student loan forgiveness. However, there are still other options that you can consider for student loan debt relief.
Which Year’s Income Will Be Used to Evaluate Eligibility?
According to a White House official, your income for either the tax year of 2020 or 2021 must meet the income requirements to receive federal student loan forgiveness. The Department of Education has not yet released information about how to provide proof of or submit any income documentation.
How Long Will it Take to Receive Forgiveness?
The timeline for receiving your student loan forgiveness depends on the borrower information that the U.S. Department of Education has on file.
If Your Income is Already on File
According to the Federal Student Aid (FSA), around 8 million borrowers will receive their loan forgiveness automatically because their income is already on file.
For example, the U.S. Department of Education already has the income data of federal borrowers with income-driven repayment plans. Therefore, these individuals are most likely to receive their loan forgiveness automatically.
If Your Income is Not On File
For federal borrowers whose income is not on file, the Department of Education will release an application in early October to be filled out and submitted. To be notified when the application is open, subscribe to the Department’s email list.
The deadline for this application is December 31st, 2022, however, you should fill it out as soon as you can after it’s released. In fact, experts advise borrowers to fill out and submit the application before November 15th to receive their student loan forgiveness before the COVID-19 payment pause ends on December 31st, 2022.
|Full Application Timeline|
|Early October → Student loan forgiveness application is released.|
|11/15/2022 → Submit student loan forgiveness application before this date.|
|12/31/2022 → Application is due. COVID-19 forbearance ends.|
FAQ About Student Loan Forgiveness
Will Loans Be Forgiven Before the Payment Pause is Over?
Borrowers are strongly encouraged to submit their student loan forgiveness application before November 15th, 2022 to have their debt canceled before the payment pause ends on December 31st, 2022. If your application is not submitted prior to November 15th, there is a higher chance that your student loan amount will not be forgiven before the end of the forbearance.
Will the Student Loan Forbearance Be Extended Again?
According to the Biden Administration, the student loan forbearance will not be extended again. This is the final extension, and the payment pause will end on December 31st, 2022.
Will More Student Debt Be Forgiven?
Currently, there is no evidence that President Biden will forgive more student loan debt than what is already outlined.
Closing Thoughts From the Nest
President Biden’s student loan forgiveness is a win for federal borrowers. As the prospect of having your student loan debt wiped out approaches, it is crucial to stay on top of the news and follow every update that the federal government releases.