Student Loan Forgiveness has been scaled back — will you be affected?

student loan with money surrounding it
(Image credit: Shutterstock)

In August, President Biden released plans for student loan forgiveness. Under this plan, borrowers making less than $125,000 a year ($250,000 for married couples) would qualify for $10,000 forgiveness on federal loans, or $20,000 if they were Pell Grant recipients.

Additionally, borrowers who took out privately owned federal student loans, such as the Federal Family Education Loans and Perkins Loans, were told by the Department of Education that their debt could be eligible for forgiveness if consolidated into direct loans.

Here’s the catch. While no deadline for consolidation was given initially, the department then announced, too late for most, that the deadline to consolidate was September 29th, 2022. This shocking news leaves 770,000 borrowers (opens in new tab) affected. If you’re left in the lurch of this decision, here are ways you can pay down student debt (opens in new tab) as  quickly as possible. You may also be eligible for other forms of loan forgiveness (opens in new tab).

Applications for loan forgiveness were slated to be released in early October, but have since been held off until at least Oct. 17. Once applications do come out, borrowers are encouraged to apply by Nov. 15 in order to complete forgiveness before payments resume in January. You can sign up for application notifications by going to https://www.ed.gov/subscriptions (opens in new tab)

Unsure whether or not you’ll be affected by this decision? First, you’ll want to verify your income to determine if you’re above the threshold: $125,000 a year for individuals or $250,000 for married couples. This can easily be done by checking your 2020 and 2021 tax returns.

If you find your income qualifies you for forgiveness, you’ll then want to confirm what type of loans you took out. You can either call your loan servicer, or go to studentaid.gov to find out this information. Keep in mind that this program only applies to loans which were taken out before June 30, 2022. 

Erin Bendig
Staff writer, personal finance

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.