How to Claim Your Student Loan Forgiveness

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The Biden administration is canceling a portion of federal student loan debt and pushing back the date when people have to resume making payments on their student loans. Here’s how to find out if you qualify and what you have to do to claim the relief.

Who Is Eligible

The program applies only to federal student loans. The Education Department will cancel up to $20,000 in student loan debt for people who went to college on Pell Grants, and up to $10,000 for those who didn’t get Pell Grants. People are eligible if their individual income is less than $125,000 a year, or $250,000 for a married couple.

If everyone who is eligible participates, it would cover 43 million borrowers, erasing the remaining debt for 20 million of them, the White House said. And the relief isn’t considered taxable income for federal income tax purposes.

What’s a Pell Grant? 

These are loans for undergraduate students based on information they submit through the Free Application for Federal Student Aid (Fafsa). Pell Grants are awarded based on financial need, taking into account the cost of the school, the expected financial contribution by the family and other factors. The maximum Federal Pell Grant award for an individual in the 2022-23 school year (July 1, 2022, to June 30, 2023) is $6,895.

Nationwide, about one-third of undergraduate students get Pell Grants. The Education Data Initiative said the average Pell Grant is $4,491, and a little more than half of the recipients are from families that earn less than $20,000 a year.

Do current students with federal loans qualify?

Yes, if they meet income eligibility requirements. Dependent students are eligible for relief based on their parents’ income, rather than their own.

What If I Can’t Remember What Loans I Got?

If you can’t remember what kind of federal student loan you got, or you want to check, the website is studentaid.gov. You may have to set up an account.

The Education Department estimated that 21% of those eligible for debt cancellation are 25 or younger and 44% are 26-39. More than one-third are 40 and older and 5% are senior citizens.

What do I have to do to claim this debt relief?

The White House said nearly eight million borrowers could receive relief automatically because their income data is already available to the Education Department. If people don’t know if they qualify, the Education Department will make an application available before the pause on federal student loan repayments ends on Dec. 31.

Are there any other ways to qualify for debt relief?

Yes. Borrowers who work for nonprofits, the military, or federal, state, tribal, or local governments could also qualify to have their student loans forgiven through the Biden administration’s Public Service Loan Forgiveness (PSLF) program. But these temporary changes expire Oct. 31, so people must apply before then.

What if I can’t afford the monthly payment on my remaining student loans?

People with loans from undergraduate colleges can cap repayments at 5% of their discretionary incomes, Biden said. That is down from a previous 10% cap. The plan also raises the amount of income considered not discretionary and cancels balances after 10 years for people who had original loan balances of $12,000 or less.

What happens to my student loan repayments that were scheduled to resume in September? 

People haven’t had to make payments on their student loan debt since the pandemic started in March 2020. Biden has extended this four times and on Wednesday extended it again for what he said would be the last time. People won’t have to start making payments again until January 2023.

How much will all this debt relief cost?

The Wharton School of the University of Pennsylvania estimated this week that forgiving $10,000 for each borrower in federal student loan debt with income caps could cost about $300 billion over 10 years.

Write to Janet H. Cho at [email protected]