The Biden Administration's Student Loan Debt Relief Plan
- Home
- Financial Aid
- The Biden Administration's Student Loan Debt Relief Plan
On August 24, 2022,
President Joe Biden announcedopen_in_new that his administration will be forgiving (cancelling) up to $10,000 in student loan debt for millions of borrowers. Please read the following to learn more about the three-part plan, the types of loans this plan applies to, and which loan borrowers are eligible for this treatment.
Eligible Loans
Currently and formerly enrolled undergraduate, graduate, and parent PLUS loan borrowers eligible for student loan debt forgiveness include:
- Direct Loan borrowers with Direct Loans first disbursed on or before June 30, 2022;
- Direct PLUS borrowers (parent and graduate) with Direct PLUS Loans first disbursed on or before June 30, 2022;
- Direct Consolidation Loan borrowers for which the underlying consolidated Direct Loans have a first disbursement date on or before June 30, 2022;
- Direct Consolidation Loan borrowers for which all of the underlying Family Federal Education Loan (FFEL) Program loans were held by the U.S. Department of Education (ED) and have a first disbursement date on or before June 30, 2022;
- FFEL borrowers whose FFEL loans have been transferred to ED for servicing (so they are federally held) and have a first disbursement on or before June 30, 2022;
- FFEL borrowers with FFEL Program loans held by ED or in default at a guaranty agency and have a first disbursement on or before June 30, 2022;
- Federal Perkins Loan borrowers with Perkins Loans held by ED and have a first disbursement on or before June 30, 2022; and
- Defaulted borrowers with loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins Loans held by ED).
Private (nonfederal) loans are not eligible for forgiveness. If the borrower consolidated federal loans into a private (non-federal) loan, the consolidated private loan is not eligible for debt forgiveness. ED is assessing whether to expand eligibility to borrowers with privately owned federal student loans, including FFEL and Perkins Loans.
Only federal student loans with an outstanding balance as of June 30, 2022, are eligible. Students who are enrolling after June 30, 2022 and who have loans with first disbursements after June 30, 2022 are not eligible for this forgiveness. Cash management rules in 34 CFR 668.164 continue to apply, and the school cannot retroactively disburse loans in order to qualify students for forgiveness.
FFEL borrowers may consolidate into a Direct Consolidation Loan in order to qualify for the loan forgiveness. Qualification for debt relief then will be based on the first disbursement dates of the underlying loans and not on the date of the consolidation loan (i.e., consolidation does not "reset the clock" for these borrowers). NASFAA is still awaiting confirmation on whether these borrowers are required to consolidate into a Direct Consolidation Loan and what the deadline for consolidation might be.
If borrowers are unsure of their loan type, as a general rule, if they were benefiting from the repayment pause, they have loans that qualify.
Part 1.
Final extension of the student loan repayment pause
To ensure a smooth transition to repayment and prevent unnecessary defaults, the Biden-Harris Administration will extend the
pause a final time through December 31, 2022, with payments resuming in January 2023.
Part 2.
Providing targeted debt relief to low- and middle-income families
Eligibility: Borrowers are eligible for this relief if their individual income in 2020 or 2021 is less than $125,000 or $250,000 for married couples or heads of households.
Amounts:
- Pell recipients (received at any time during their undergraduate): up to $20,000
- Non-Pell recipients who meet eligibility: up to $10,000
In addition, borrowers who are employed by non-profits, 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
PSLF.govo pen_in_new.
Part 3.
Make the student loan system more manageable for current and future borrowers
The rule would:
- Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
- Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
- Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
- Cover the borrower's unpaid monthly interest, so that unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.