Applications for President Biden’s one-time student loan debt forgiveness will be available in October on the U.S. Department of Education’s website. But before you apply, there are a few things you need to know that could affect your eligibility.

Who’s eligible for student loan forgiveness?

To be eligible for student loan debt cancellation, you must:

  • Have federal student loans (students who used a private loan or refinanced with a personal loan to pay off student loan debt are not eligible)
  • Earn less than $125,000 as an individual or less than $250,000 if filing as a couple in 2020 or 2021.
  • Have received a Pell Grant (to be eligible for $20,000 in debt cancellation). If you’ve never received a Pell Grant, you’ll qualify for $10,000.
  • Be a parent or guardian who has taken out Parent PLUS loans (and meets income requirements)

How to apply for federal student loan forgiveness

Once the applications are live on the Department of Education’s website, you’ll need to:

  1. Fill out the application. To receive the forgiveness, you must apply by December 31, 2023. Only online applications will be available now, but the Department announced there will be paper applications “eventually.”
  2. Certify your income for either 2020 or 2021.

You will then receive notice from the Department of Education whether or not you qualify and the next steps.

Tips for ensuring you’re approved to have your student loan debt canceled

  1. Apply as soon as you can – Forgiveness will be on a first-come, first-served basis. Also, the federal pause on student loan payments will expire on December 31, 2022, so try to apply before then to prevent yourself from having to make another payment.
  2. Understand what type of loans you have – You can check the “My Aid” page on to see whether you’ve received federal student loans, Pell Grants, etc. If you’ve received a Federal Family Education Loan (FFEL) or Perkins Loan, check your paperwork carefully, as some FFELs are private loans and are not currently eligible (though the government is assessing whether they can change that). Your servicer should start with “Dept. of Ed” or “Default Management Collection System” to be eligible for forgiveness.
  3. Understand how much you’ll receive – President Biden’s debt cancelation is only good for “up to” $10,000 (or $20,000 if you’ve received a Pell Grant), meaning that you won’t receive a refund if you owe less than $10,000. For example, if you have $6,000 remaining in student loan debt, you will have that $6,000 forgiven. You will not receive a refund check for the remaining $4,000 (or $14,000).

What if I have multiple federal student loans?

The order in which loan debt will be canceled is as follows:

  • Defaulted loans held by the US Department of Education
  • Defaulted commercial FFEL loans (not private)
  • Non-Defaulted direct or FFEL loans held by the US Department of Education
  • Perkins Loans held by the US Department of Education
  • Outstanding federal loans in good standing

What this means: If you have multiple loans and any of them are currently in default, the $10,000 will go towards the defaulted ones first. If you have no federal student loans in default, then forgiveness will be applied directly to your current student loans.

The bottom line

President Biden’s student loan debt cancellation will go a long way toward helping Americans reduce their overall debt load. But it’s essential to know the rules to make the most of this relief and to apply as early as possible.

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Contact Information:

Name: Michael Bertini
Email: [email protected]
Job Title: Consultant

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