Ready to ditch some of that student loan debt that’s been dogging you for years? The new government program can offer relief.

3 minute read

If you’re saddled with thousands of dollars in student loan debt, you’ve been waiting a couple of years now for the government’s newly announced student loan forgiveness program.

Depending on income qualifications, borrowers with federal student loans can receive up to $10,000 or $20,000 in student loan debt forgiveness. Wondering if you’re eligible to dump a big chunk of student loan debt through the new student loan debt relief program?

Here’s what you need to know about who is eligible, whether you need to apply for relief and more proposed student loan relief that could be on the way.

Who is eligible for student loan forgiveness?

Borrowers with federal student loans through the U.S. Department of Education (DOE) could be eligible for up to $10,000 in student debt cancellation — or up to $20,000 for borrowers who received Pell grants for college, according to Whitehouse.gov.

To qualify,  borrowers must earn under $125,000 annually for individuals or $250,000 for married or heads of household couples.

In addition, the government has made time-limited changes that expire on October 31, 2022, to the DOE’s Public Service Loan Forgiveness (PSLF) program. The changes loosen eligibility criteria to receive forgiveness for all their student loans for borrowers employed by:

  • Qualifying nonprofits
  • The military
  • Federal, state, tribal or local government

The PSLF program forgives the remaining balance on your federal student loans once you’ve made 120 payments while working full-time for the above employers.

“Temporary changes, ending on Oct. 31, 2022, provide flexibility that makes it easier than ever to receive forgiveness by allowing borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF,” says Whitehouse.gov.

For more information on the time-limited PSLF program eligibility, visit Whitehouse.gov.

What if I owe less than the forgiveness amount cap?

The $10,000 or $20,000 cap on student loan debt forgiveness applies to the amount of student loan debt you have. So, if you owe $15,000 and you’re eligible for up to $10,000 in debt relief, the forgiveness amount would be $10,000, and you would still owe the remaining $5,000.

But if you owe less than the $10,000 cap for which you’re eligible — $7,000, for example — you would receive only $7,000 in student loan forgiveness.

Find out: 5 Tips to Help You Avoid Student Loan Forgiveness Scams

How do I receive student loan forgiveness with the new program?

Around eight million borrowers will receive student loan forgiveness automatically if the DOE already has their annual income data, according to Whitehouse.gov. If the DOE doesn’t already have your income data, you can apply through a simple application that should be available in early October.

To receive updates and notifications when the forgiveness application is available, sign up for email updates at the DOE subscription page.

How long will I have to wait for student loan debt forgiveness?

Borrowers that complete the application for the government’s student debt forgiveness program should see up to $10,000 or up to $20,000 (if the borrower received a Pell grant) of their student loan debt forgiven within four to six weeks of completing the application, according to Whitehouse.gov.

But keep in mind that nearly eight million eligible borrowers with income data on record at the DOE will receive the student loan forgiveness automatically. So, you may not need to fill out an application for relief.

The government encourages eligible borrowers that must apply for student loan forgiveness through the new program to apply by November 15, 2022, to receive forgiveness by December 31, 2022.

When does the student loan repayment pause end?

The student loan repayment pause in effect since 2020 due to the pandemic and a troubled economy will finally end on December 31, 2022, according to Whitehouse.gov. Student loan repayment requirements will resume in January 2023.

Is more student loan relief on the way?

The Biden-Harris administration is also proposing a new rule to create a new income-driven repayment plan that would “substantially reduce” monthly student loan payments for lower- and middle-income borrowers, according to Whitehouse.gov.

The proposed rule would:

  • Lower borrower’s monthly payments from ten percent (the most recent income-driven repayment plan) to no more than five percent of their discretionary income.
  • Raise the income amount considered non-discretionary so that no borrower earning under 225 percent of the federal poverty level — around the annual amount earned by a worker making $15 an hour — will need to make a monthly payment.
  • Forgive student loan balances after ten years (instead of 20 years) if the borrower owes less than $12,000 in student loan debt.
  • Cover the borrower’s monthly student loan interest so balances don’t spiral out of control.
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About the Author

Deb Hipp

Deb Hipp

Deb Hipp is a full-time freelance writer based in Kansas City, Mo. Deb went from being unable to get approved for a credit card or loan 20 years ago to having excellent credit today and becoming a homeowner. Deb learned her lessons about money the hard way. Now she wants to share them to help you pay down debt, fix your credit and quit being broke all the time. Deb's personal finance and credit articles have been published at Credit Karma and The Huffington Post.

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