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Student Loan Debt Forgiveness FAQ: Who Gets Relief, How Much Is Canceled and When Will It Happen?

Get all the details on President Biden's plan for student loan debt forgiveness.

$100 bills fanned out.
Borrower with student loans held by the federal government can receive up to $20,000 in relief.
Sarah Tew/CNET

On Aug. 24, President Joe Biden announced his plan to forgive up to $10,000 in student loan debt per borrower, plus an additional $10,000 for those with federal Pell Grants. The White House also declared an end to the student loan payment and interest pause that's been in effect since March 2020 -- student loan payments on federal loans will resume Jan. 1, 2023.

At $1.75 trillion, student loan debt is the largest form of consumer debt outside of mortgages, according to the Federal Reserve Bank of New York -- more than auto loans and credit cards. According to a Federal Reserve study, the median outstanding education loan is between $20,000 and $24,999. 

"This means people can start to finally crawl out from under that mountain of debt," Biden said while announcing the plan.

Biden's decision to cancel student debt for millions of Americans follows a series of focused student-loan forgiveness orders by the federal government, including for those in public service, for students misled or defrauded by educational institutions and for those with disabilities

Are you eligible for student loan debt forgiveness? Here's what you need to know, including exactly who qualifies, how much debt will be erased and the process for applying.

For more on debt, here's how to get out of credit card debt and the difference between "good debt" and "bad debt."

Who qualifies for loan debt forgiveness?

The White House's plan will forgive federal student loan debt for borrowers who earned less than $125,000 -- or less than $250,000 for heads of households or married couples filing jointly. Along with undergraduate federal loans, the plan covers graduate and parent PLUS loans, according the the Washington Post.

Read more: Here's How to Check How Much You Earned Last Year

Which student loans are included in debt forgiveness? 

Almost all student loans provided by the government -- including Pell grants -- qualify for the forgiveness plan. These loans include direct loans (subsidized or unsubsidized), graduate PLUS loans and parent PLUS loans. If your loan was included in the moratorium on student loan payments and interest that has been in effect since March 2020, it will be eligible for the debt forgiveness plan.

Private loans made by banks, credit unions or other financial institutions are not included.

What about FFEL and Perkins loans?

Federal Family Education loans and Perkins loans that are held by the federal government are eligible for student loan debt forgiveness. However, FFEL and Perkins loans held by private lenders do not qualify. Borrowers with privately held FFEL and Perkins loans must have consolidated their student loans with the federal government by Sept. 29, 2022, in order to be eligible for forgiveness.

According to the student debt cancellation page on the Federal Student Aid website, the Department of Education is "assessing whether there are alternative pathways to provide relief to borrowers with federal student loans not held by ED, including FFEL Program loans and Perkins Loans, and is discussing this with private lenders." 

How do I apply to have my debt forgiven?

About 8 million borrowers will automatically have their debt canceled because their income information is already filed with the Education Department. The department could have your information if, for example, you are enrolled in an income-driven repayment plan.

If the Education Department doesn't have your income data, you'll need to complete an online application that the White House plans to launch soon. In an Aug. 26 press briefing, Deputy Director of the National Economic Council Bharat Ramamurti said that, "the application will be available by early October."

How much student loan debt is being forgiven?

The Federal Reserve estimated that, at the start of 2022, about 45 million Americans were carrying federal student loans.

For those who qualify under the income caps, the White House plan would erase $10,000 of debt from their federal student loans. Those with Pell grants, roughly 27 million borrowers, would get an additional $10,000 of their debt canceled, bringing their total to $20,000 in canceled debt, according to a White House press release.

In all, the plan is expected to wipe out $321 billion in federal student loans.

Roughly one-third (31%) of borrowers will see their entire debt erased, according to the Fed, while the average borrower would receive $8,478 in student loan forgiveness. 

Will the administration cap monthly loan repayments?

The administration is also proposing a cap on monthly undergraduate student loan repayments at 5% of the borrower's monthly salary, a major change from the 10% cap under the current repayment plan.

The proposed plan would cover the borrower's unpaid monthly interest, so their loan balance would not grow so long as they made regular minimum monthly payments, the Education Department said.

Borrowers with undergraduate and graduate loans will pay a weighted average rate, the Education Department said.

Hasn't the Education Department already forgiven some student loans?

The Biden administration has scratched student loans for some borrowers already, including those in public service , those with total and permanent disabilities and former Corinthian Colleges students.

Prior to the announcement, the Department of Education under Biden already approved nixing $32 billion in loans for 1.6 million borrowers.

figure of graduate with calculator

Only loans issued by the federal government are eligible to be canceled.

Getty Images

What about the pause on student loan payments and interest?

The pause on loan repayment, interest and collections, which was slated to expire on Aug. 31, has been extended through Dec. 31, 2022. Payment requirements will resume in January 2023.

Loan repayments have been paused seven times since former President Donald Trump's administration first instituted a moratorium in March 2020.

I'm still in college with student loans. Will $10,000 of my federal student loan debt be canceled after I graduate?

Students currently in college with loans are eligible to have their loans forgiven. However, borrowers who are dependent students will be eligible based on parental income, rather than their own income, the administration said. 

For more on loan forgiveness, here's what to know about applying for public service loan forgiveness,  how having your debt canceled could affect your credit score and if you should keep making payments during the extended moratorium.