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President Biden Announces Student Loan Relief Plan: Here's the Details

Updated: Aug 16, 2023

On August 24, 2022, President Biden announced that the federal government plans to cancel federal student loans issued prior to July 1, 2022 for those who qualify. This announcement impacts many borrowers who may be eligible for relief. There are several stipulations to this provision, and we are still waiting on some details, but here is what we know so far:

1. Who qualifies for loan forgiveness?

Individuals who are single and earn less than $125,000, or are married and earn less than $250,000 are eligible for loan forgiveness. Eligibility can be based on either 2020 or 2021 adjusted gross income figures.

Additionally, if you have voluntarily made payments since March 2020, when payments on student loans were paused, you can request a refund for these payments, according to the Federal Office of Student Aid. To receive a refund of up to the $10,000 limit, contact your loan servicer. Borrowers with defaulted loans who benefited from the payment freeze are also eligible for forgiveness.

In addition, borrowers who are employed by nonprofits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is because of time-limited changes that waive certain eligibility criteria in the PSLF program. These temporary changes expire on October 31, 2022. For more information on eligibility and requirements, go to

2. How much will be forgiven per individual?

Up to $10,000 in federal student loans will be forgiven per individual. This includes Parent Plus, Graduate Stafford and Plus, and Stafford loans. Debt in the Federal Family Education Loan (FFEL) Program managed by the Education Department also qualifies for relief. Private student loans are not eligible. Pell Grant recipients are eligible for an additional $10,000 in relief for a total of up to $20,000 in loan forgiveness.

It is important to note that if you owe less than is being forgiven, the relief is capped at the amount of your outstanding eligible debt. For example, if you owe $7,000 in student loans, only that $7,000 will be forgiven and you will not receive an additional $3,000.

3. How will it impact taxes?

Student loan forgiveness will not trigger a federal tax bill. This is due to the American Rescue Plan of 2021, which made student loan forgiveness tax free through 2025.

However, some states may count the forgiveness balance as income, meaning that it is still possible to have a state tax bill on the amount forgiven.

4. What are my next steps to receive student loan forgiveness?

Start by ensuring that your loan servicer has your current postal address, email address, and phone number. If you have ever applied for an income-driven repayment plan and allowed the Department of Education to have access to your IRS information, then you may not need to do anything else. Nearly 8 million borrowers will be eligible automatically because their relevant income data is already available to the US Department of Education. Borrowers who have used one of the standard payment plans will need to file an application. This new application is expected to be released by the end of the year, and will allow you to submit proof of income.

In addition, if you are unsure if you have received a Pell Grant, you can visit, login, and then go to the aid summary page.

5. What else should I know about my student loan payments?

The Biden Administration extended the student loan repayment pause a final time through December 31, 2022, with payments resuming in January 2023.

Monthly loan payments will be recalculated, but servicers have yet to receive guidance on when or how these payments should be recalculated. Borrowers enrolled in income-driven repayment plans will not see their payments change, as their payments are based on their discretionary income and household size.

Additionally, the Biden Administration is proposing a new income-driven repayment plan to make monthly payments more manageable for borrowers. The proposed plan consists of the following objectives:

  1. Reduce payments on undergraduate loans to 5 percent of discretionary income, down from 10 to 15 percent in many existing plans. Graduate debt is also eligible, with payments being 10 percent of discretionary income.

  2. Reduce the portion of income that is considered non-discretionary and is therefore excluded from repayment calculations.

  3. Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with original loan balances of $12,000 or less.

This proposed plan is still being discussed by the Administration.


As this plan will impact millions of borrowers, we expect many questions to arise. We would be happy to answer any of those questions or discuss how this initiative applies to your individual situation.

If you have any questions, we are happy to help. Please contact us here or visit our website for more information.


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