Biden’s student loan forgiveness 

President Biden has recently announced a three-part initiative to help students cover their debts. The plan includes loan forgiveness of up to $20,000. What does that mean for you, and how can you apply for the relief – read below

Student loan forgiveness

Biden’s student loan forgiveness. Source:

Late August brought great news to all working and middle-class federal students who used a loan to finance their studies. President Biden, Vice President Harris, and the U.S. Department of Education have revealed a new plan to help student borrowers transition back to regular payment as pandemic-related support expires. 

Although the US government hasn’t yet disclosed all of the initiative details, some common student questions have already received their answers. This article will shed light on the basic mechanisms of student loan forgiveness.

The main changes brought by Student Debt Relief Plan

Income-based repayment plans for student debts have long existed within the U.S. Department of Education. However, the new initiative by the Biden-Harris Administration will substantially reduce future monthly payments for lower- and middle-income borrowers.

The new governmental program would:

  • Require borrowers to pay under 5% of their discretionary income monthly on undergraduate loans (down from the 10% applicable now). 
  • Raise the amount of income considered non-discretionary and protected from repayment. The plan guarantees that no borrower earning under 225% of the federal poverty level (about $15 minimum wage for a single borrower) will have to make a monthly payment. 
  • Forgive loan balances after ten years of payments, compared to the current 20-year term, for borrowers with loan balances of $12,000 or less.
  • Cover the borrower’s unpaid monthly interest so that no borrower’s loan balance will grow as long as they make their monthly payments. That would apply even when that monthly payment is $0 because their income is low.

Student loan repayment pause

Due to the pandemic crisis, the US Administration has extended the student loan repayment pause several times over the last two years. It means that federal authorities didn’t demand students repay loans they took to cover their college tuition fees. 

This year, the government decided the US economy is on a revival track. Thus, the final pause extension will end on December 31, 2022. Loan repayments will resume in January 2023.

The pause will extend automatically. Therefore, students don’t have to take additional measures to prolong their non-repayment period. 

Who’s eligible for loan forgiveness?

Federal authorities can forgive the borrower part of the student debt. Thus, the U.S. Department of Education will cancel up to $20,000 in debt of Pell Grant recipients and up to $10,000 in debt cancellation to non-Pell Grant recipients.

Not all of the students are eligible for relief, though. The initiative targets low- and middle-income families. To qualify, your income should be less than $125,000 for an individual or $250,000 for households. 

Besides, the Public Service Loan Forgiveness (PSLF) program presupposes complete student loan forgiveness. It applies to borrowers employed by nonprofits, the military, or federal, state, Tribal, or local governments.  


The U.S. Department of Education will accept applications for loan forgiveness until the end of 2023. At the moment, the process hasn’t officially started, though. It is scheduled for early October. To keep abreast of the application service launch, you should subscribe to official updates

Furthermore, you may not need to fill out any applications at all. Nearly 8 million borrowers may be eligible to receive relief automatically since relevant income data is already available to the U.S. Department of Education. However, so far, there is no information about the ways to check whether your data is registered or not. That’s why the authorities advise all eligible students to fill out the application form once it’s available.

NOTE: Borrowers who are employed by nonprofits, the military, or federal, state, Tribal, or local government should apply before Oct. 31, 2022. Otherwise, they won’t be eligible for the time-limited relief under the Public Service Loan Forgiveness (PSLF) program.

Temporary changes, ending on Oct. 31, 2022, allow borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF.

Terms and requirements

The government encourages everyone who is eligible to file the application before November 15th in order to receive relief before the payment pause expires on December 31, 2022. Nevertheless, the Department of Education will continue to process applications as they are received, even after the pause expires.

Once a borrower completes the application, they can expect to receive relief within 4-6 weeks.

Types of debt that may not qualify for student loan forgiveness

Over 40 million Americans currently have outstanding student loans. The loans qualified for forgiveness should be held by the U.S. Department of Education and not by commercial lenders.

That includes Direct Stafford Loans, and all Direct subsidized and unsubsidized federal student loans. Parent Plus and Grad Loans under the Direct program are also eligible for the relief. 

However, not all Federal Family Education Loan (FFEL) debts may be federally held. Borrowers eager to know where their FFEL loans are held can go to and sign in with their FSA IDs. If the FFEL loan is commercially held, you may call your servicer and consolidate them into the Direct Loan Program to become eligible for forgiveness.

Besides, certain loans from the Federal Perkins Loan Program may be held by colleges instead of the U.S. Department of Education. 


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Nina Bobro

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Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.