The Scoop on Recent Student Loan Relief – Plus, a Critical Task for PSLF Borrowers

By Rachel Puryear

Last month brought much-needed good news for student loan debtors across the nation.

Though there’s still a long way to go, especially for those struggling to pay large loan balances; this relief will still help a lot of borrowers who are struggling with debt.

Any amount of relief can also open the door to increased debt relief in the future. Having negotiated professionally for many years, I can tell you that getting people to move on a disputed matter is hardest the first time – then once they’ve moved before, it’s easier to get them to move again.

Anyway, here’s a breakdown of what Biden’s recently issued relief plan means for millions of American borrowers, plus – if there’s any possibility that you’ll be applying for Public Service Loan Forgiveness later on, we’ll go over something you need to do by October 31, 2022.

Also note: Unfortunately, the loan forgiveness does not apply to private student loans, as these are owed to private lenders rather than to the federal government.

Hand squeezing stress ball with “debt” written on it.

Who Qualifies for How Much Loan Forgiveness

If you received a Pell Grant for college, you still owe student loans, and your income in either 2020 or 2021 is less than $125,000 for an individual/$250,000 for a married couple; then you will receive up to $20,000 in debt cancellation.

For (nearly all) other federal borrowers who did not receive a Pell Grant; if you still owe student loans and your income in either 2020 or 2021 is less than $125,000 for an individual/$250,000 for a married couple; then you will receive up to $10,000 in debt cancellation.

Note that for the purposes of determining income eligibility, income is calculated based upon Adjusted Gross Income on the borrower’s federal tax return.

Also, if you had student loan debt cancelled, remember next year when you do your taxes that this debt cancellation does not count as taxable income.

The vast majority of federal loans held by borrowers meeting income requirements are eligible for this loan forgiveness – including undergraduate and graduate loans, Parent PLUS loans, federal Direct student loans, and some FFEL-program loans and federal loans held by the federal government.

Also, an otherwise-qualifying loan in default status is also eligible for forgiveness.

Public Service Loan Forgiveness Borrowers, Act by Oct 31

If you have student loans and you have ever worked for a government entity, nonprofit, or other qualifying employer; you may wish to pursue loan forgiveness under the Public Service Loan Forgiveness (PSLF) program down the line.

It’s possible that you previously made payments that you believed qualified for credit under the PSLF program, but that those loan payments actually did not count due to technicalities – i.e., you had not consolidated your loan.

However, there’s a limited amount of time to apply for a waiver, so that loan payments you made while working for a qualifying employer that didn’t previously qualify, will now qualify.

See here for more information about the PSLF program, and the link to apply for the waivers.

Don’t delay – the deadline for these waivers is October 31, 2022!

Next Steps for Borrowers

Some borrowers will not receive the loan forgiveness automatically, and will need to apply for it – it depends upon whether or not the Department of Education has the income information already.

As it’s unclear how a borrower would know if they need to apply or not, it’s a good idea to apply, regardless.

The application is due to be released in early October of 2022. Applicants will have until December 31, 2023 to apply for forgiveness.

To be notified when the application will be available, sign up here.

It’s a good idea to apply as soon as possible, in order to be approved before repayments are scheduled to start in January. The Department of Education recommends applying by November 15, 2022 to have your application processed by January.

Remaining loan balances will be re-amortized after loan forgiveness.

Thank you, dear readers, for reading, following, and sharing. Here’s to freedom from crushing debt.

Got a question you want answered through this blog? Submit your question to me here – and if you don’t already, please request to subscribe to the Free Range Life newsletter while you’re there!

Check out my other blog, too – World Class Hugs, at It’s about better understanding relationships, empathic perspectives, and traveling and nature photos.

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