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Borrowers Could Get Student Loan Debt Automatically Canceled in 2 Weeks

Many student loan borrowers with income info on file won't need to apply to have debt discharged.

An illustration of a graduation cap on top of gold coins
About 8 million borrowers will receive up to $20,000 in student loan debt relief automatically.
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As the legal challenges to President Joe Biden's plan to forgive up to $20,000 in federal student loan debt proceed in courts, the White House continues to urge eligible borrowers to file claims for debt relief. After the recent court decision to pause onetime student loan debt relief, White House Press Secretary Karine Jean-Pierre announced that the "temporary order does not prevent borrowers from applying for student debt relief at studentaid.gov."

While most of the 40 million borrowers eligible for onetime student loan debt relief will need to apply online, others will get student loan debt discharged without doing anything. Federal debt cancellation could happen automatically for about 8 million Americans as early as Nov. 14.

On Oct. 18, the Education Department emailed those people who will receive debt forgiveness automatically. The message reads, "We will work with your servicer to process any relief for which you're eligible after November 14, unless you opt out. If you'd like us to start processing your relief sooner, you can submit an application now." Borrowers who don't want to receive any student loan debt relief must contact their loan servicer before Nov. 14 in order to be excluded.

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Learn which borrowers will have student loan debt canceled automatically without needing to apply and how the process works. For more about student loan debt relief, learn whether your forgiveness will be taxed by your state and how debt forgiveness could impact your credit score.

Who gets automatic student loan debt relief?

Borrowers whose income data is already on file with the federal government will not need to apply for student loan debt forgiveness, the Biden administration said. Because the Department of Education can use the information it has on hand to verify those borrowers' income eligibility, it will work with loan servicers to cancel either $10,000 or $20,000 automatically.

The biggest group of  borrowers who have income data filed with the department are enrolled in income-driven repayment programs. These plans allow those with student loans to settle their debt by paying a fixed monthly amount based on their income, usually over 20 to 25 years.

To get student loan debt canceled, participants in IDR plans must have recertified their income data for either 2020 or 2021.

The other borrowers who can expect to receive student loan debt relief automatically are those who filed FAFSA -- the Free Application for Student Aid -- for the school year 2022-23. Income data included in the application will be used to determine student loan debt relief.

The Education Department says that all borrowers who are eligible for automatic student loan debt relief will receive an email explaining that they don't need to apply and giving them the opportunity to opt out of student loan debt forgiveness. If you have a Federal Student Aid account and have enabled text notifications, you'll get a text message with similar information.

If I have income on file with the government, should I still apply for student loan debt relief?

Yes. Even if you've received an email from the department explaining that you'll get your debt canceled automatically, there's no harm in applying for debt forgiveness. 

This student loan debt relief program is still new, and there's a risk of glitches and errors. Applying for debt relief even though you expect to get it automatically should have no negative impact.

The form to apply for student loan debt relief is very short and can be completed in two minutes. All you need to enter is your name, Social Security number, birth date, email address and phone number, plus a signed statement indicating that you're eligible for relief.

How do I know if I am eligible for student loan debt relief?

All borrowers with federally held student loans are eligible for $10,000 in forgiveness if they earned less than $125,000 in 2020 or 2021 as a single tax filer, or $250,000 as a head of household or married filing jointly. Eligible borrowers who received Pell Grants can receive another $10,000 in relief to cancel a total of $20,000 in debt.

If you're not sure of your exact income in 2020 and 2021 and you filed a federal tax return in those years, you can easily look up your income from your tax returns using a free IRS online account.

For more about student loans, learn how teachers and other public servants can get their entire student debt erased with the Public Service Loan Forgiveness program.