Debt Relief

The Biden-Harris Administration Student Debt Relief Plan

Borrowers who wish to receive information on this from Federal Student Aid may sign up for notifications:

• Subscriptions | U.S. Department of Education

Borrowers

The information and details for Debt Relief are still evolving; here is basic information as we know it now:

You are eligible if you have most federal loans (including Direct Loans and other loans held by the U.S. Department of Education) and your income for 2020 or 2021 is either:

• Less than $125,000 for individuals
• Less than $250,000 for households

If you are a dependent student, your eligibility is based on your parental income.

• Up to $20,000 in debt relief if you received a Pell Grant in college
• Up to $10,000 in debt relief if you didn’t receive a Pell Grant

Which loans are eligible?

The types of federal student loans eligible for relief are Direct Loans, which include subsidized loans, unsubsidized loans, Parent PLUS loans, Grad PLUS loans, and consolidated loans with an outstanding balance as of June 30, 2022.

Other loans included in the relief plan are Federal Family Education Loans (FFEL) held by ED or in default at a guaranty agency, and federal Perkins loans held by ED.

Defaulted loans — including federally-held or commercially serviced subsidized Stafford, unsubsidized Stafford, Parent PLUS, and Grad PLUS, along with Perkins loans held by ED — are also eligible for relief. Defaulted borrowers with a remaining balance after the relief are recommended to get out of default through ED’s new “Fresh Start” initiative.

Next Steps

• The application to receive President Joe Biden’s student loan cancellation opened on Friday evening for beta testing.
• During this beta testing period, the application will be available intermittently, according to ED. If a borrower tries to apply and the website is down, they can try again later — either during the testing period or when the site officially launches.
• “Those borrowers will not need to reapply if they submit their application during the beta test, but no applications will be processed until the site officially launches later this month.”
• When the site does officially launch, it will remain open until Dec. 31, 2023. ED recommends borrowers submit their application by November 15 to receive relief before the pause on student loan repayments ends on Dec. 31, 2022.
• Borrowers will also need to sign an agreement that, if requested, they will provide proof of income to ED. If a borrower fails to provide proof of income by March 31, 2024 if requested, or if a borrower’s income does not qualify for federal student loan debt relief, the relief will not be processed, ED states.
• A confirmation email for the beta test states that ED will process the borrower’s application. Unless the borrower hears back from ED or their loan servicer, they won’t have to take any other action.
  • ED will reach out to borrowers who need additional information to process their application, including to verify their income or their parents’ income if they were a dependent student between July 1, 2021 and June 30, 2022.
    
• In the meantime, visit our Frequently Asked Questions page to find out more information on the student debt relief program.

How Debt Relief is Applied

ED states that it will determine how relief gets applied to borrowers’ loans and provide the guidance to loan servicers, who will then process the relief.

For borrowers with multiple loans, the relief will be applied in the following order:

• Defaulted ED-held loans.
• Defaulted commercial FFEL loans.
• Non-defaulted Direct Loans and FFEL loans held by ED.
• Perkins Loans held by ED.

For borrowers with multiple loans in a program type, such as multiple Direct Loans, ED will apply the relief in the following order:

• Apply relief to loans with the highest statutory interest rate.
• If interest rates are the same, apply to unsubsidized loans prior to subsidized loans.
• If interest rate and subsidy status are the same, apply to the most recent loan.
• If interest rate, subsidy status, and disbursement date are the same, apply to the loan with the lowest combined principal and interest balance.

Other items included in the announcement:

Public Service Loan Forgiveness (PSLF):

Qualified students who are interested in Public Service Loan Forgiveness (PSLF) will still be eligible for this program. The time-limited changes that waived certain eligibility criteria are set to expire on October 31, 2022. Get More Details or Apply for PSLF.

Income-Based Repayment Plans:

Finally, Income-Based repayment plans will change from 10% of discretionary income to 5% of the borrower’s discretionary income and forgive federal student loan balances of $12,000 or less in 10 years rather than 20. The new plan will also raise the non-discretionary income threshold and cover the unpaid monthly interest even if your payment is $0.

Beware of Scams

You might be contacted by a company saying they will help you get loan discharge, forgiveness, cancellation, or debt relief for a fee. You never have to pay for help with your federal student aid. Make sure you work only with the U.S. Department of Education and our loan servicers, and never reveal your personal information or account password to anyone. To prevent these types of calls, register for the National Do Not Call Registry.

Questions?

The best resource for any questions you might have about this program is the Federal Student Aid website.