What You Need to Know • Salt Lake Magazine

Last month, President Joe Biden announced plans to forgive student loan debt for some student borrowers. And, since then, student borrowers (like me) have had a lot of questions. Who is eligible? How will this work? How much of my debt will be cancelled?

It impacts a lot of people. 43 million Americans have outstanding student loans, about 92% of them have federal loans, and in total we owe about $1.6 trillion. Many of us have had some breathing room over the past two years due to pandemic forbearance on all of our loan repayments, but that is set to expire for most borrowers. December 31, 2022. Before that happens, most of those 43 million people could get relief in the form of student loan forgiveness, either by reducing the amount of debt we hold or by absorbing it entirely, depending on amount you have to pay.

Off the bat, we know this is one-time student debt relief, and the US Department of Education this week changed exactly which loans would be eligible. Here’s what we know.

Who is eligible for student loan forgiveness?

Borrowers are eligible if their income on their 2020 or 2021 tax return is less than $125,000 for individuals or less than $250,000 for households. For dependent students, their eligibility is based on their parents’ income. Loan forgiveness could come in the form of debt relief of up to $20,000 for Pell Grant recipients or up to $10,000 in debt relief for those who did not receive a loan. Pell grant.

The Biden administration recently changed federal student loans eligible for the debt relief program. Based on the most recent change, they are:

  • Undergraduate and graduate direct loans
  • Parent PLUS and Grad PLUS Loans
  • Consolidation loans (underlying loans disbursed no later than June 30, 2022)
  • Federal Family Education Loan (FFEL) program loans held by the US Department of Education (ED)
  • Perkins loans held by ED
  • Loans in default (ED-owned or subsidized, non-subsidized, parent PLUS, graduate PLUS; and Perkins commercial services ED-owned)

Borrowers can check with their loan service provider if their loans are direct loans or if their lender is the US Department of Education.

People who made payments on their student loans during the pandemic forbearance will also be eligible for full or partial refunds of payments they made during that time.

How will student loan forgiveness work?

Student borrowers will need to apply for debt relief. The U.S. Department of Education will post an online application next month, October 2022. Once the application is submitted, the Department of Education will review it, determine your eligibility, and work with the loan service(s) to process debt relief. Federal student loan borrowers will have up to December 31, 2023 to apply.

What should student borrowers do before this date?

There’s not much to do right now, honestly, but wait and see. It is too late to consolidate loans if borrowers had to do so to qualify for the discount. All updates will be posted on studentaid.gov where student borrowers can also login or create an FSA account to track their loans. They can also make sure their loan officer has their most up-to-date contact information.

There are lawsuits to watch that could throw this all out the window, depending on the decision. This week, the attorneys general of Missouri, Arkansas, Kansas, Nebraska and South Carolina filed suit against the Biden administration in federal court in Missouri. The lawsuit alleges that student loan forgiveness could hurt private student loan lenders because it encourages borrowers to consolidate their loans with the federal government (depriving private lenders of repayments). The change in eligibility, however, excluding private student loans that have not yet been consolidated as of September 29, 2022, appears to have been done to weaken this legal argument.


Check out the latest community news in SLC and beyond. And while you’re here, subscribe and receive six issues of salt lake magazine, your guide to the best of living in Utah.

Comments are closed.