Student Loan Forgiveness: What You Need to Know

Authored By: Southeast Louisiana Legal Services + + Lagniappe Law Lab


Student Loan Forgiveness

The Biden administration announced a three-part plan for student loans. This plan helps those with federal student loan debt.

Extended Pause on Loan Repayments

First, there is an extended pause on loan repayments. The pause on federal student loans goes through December 31, 2022. Those with student loans should expect to make payments in January 2023. The extended pause occurs automatically. After Dec. 31, 2022, your regular loan interest rates will apply.

Changes to the Student Loan System

Second, part of the plan is the proposal of changes to the student loan system. This helps the system to be more manageable in the future. Part of the plan includes cutting monthly undergrad loan programs in half. It includes increasing the number of Pell Grants available. It also includes changing the rules for Public Service Loan Forgiveness (PSLF). This would allow more borrowers to access the PSLF program. New income-driven repayment plans also help to reduce future monthly payments for lower - and middle-income borrowers. 

Federal Loan Forgiveness

Third, the Department of Education will forgive up to $10,000 of federal loan debt. They will forgive up to $20,000 for those who received Pell Grants. There are no taxes for the amount that gets forgiven. Borrowers are eligible for this relief if their income is less than $125,000 or $250,000 for households. 

This information about federal government student loan debt relief is provided by

What You Need to Know

To qualify for the federal student loan forgiveness program you must have federal loans. The program does not apply to loans held by private lenders. You must make less than $125,000 a year if you file your taxes as an individual. This amount is $250,000 or less for married couples or the head of a household. You must also have gotten your student loan payments before June 30, 2022. Loan payments after June 30, 2022, do not qualify for forgiveness.

Borrowers should check their student loan accounts. Most borrowers will see that the Department of Education applied an automatic deduction. The Department of Education has relevant income data to apply to many borrowers automatically. If you do not see any of your student loan amounts that got deducted then you can fill out an application form. The form will get released by early October 2022. You can register to get notified when the application is available.

If you would like to be notified when the application is open, please sign up on the Department of Education subscription page. Once a borrower completes the application, they can expect relief within 4-6 weeks.

Borrowers are advised to apply before November 15th in order to receive relief before the payment pause expires on December 31, 2022, The Department of Education will continue to process applications as they are received, even after the pause expires on December 31, 2022

Borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven after they qualify for certain eligibility criteria through the Public Service Loan Forgiveness (PSLF) program. The PSLF program expanded eligibility and waived certain eligibility criteria in the PSLF program. The temporary changes expire on October 31, 2022. 

For more information on Public Service Loan Forgiveness visit the resource: 

A new income-driven repayment plan will help reduce future monthly payments for lower - and - middle-income borrowers. This rule would: 

  • Require borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. This is down from the 10% available under the most recent income-driven repayment plan.
  • Raise the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage for a single borrower—will have to make a monthly payment.
  • Forgive loan balances after 10 years of payments, instead of 20 years, for borrowers with loan balances of $12,000 or less.
  • Cover the borrower's unpaid monthly interest, so that, unlike other existing income-driven repayment plans, no borrower's loan balance will grow as long as they make their monthly payments—even when that monthly payment is $0 because their income is low.

FAQs Student Loan Forgiveness

FAQs Student Loan Forgiveness

Making payments during the payment pause could help you pay down your loan balance more quickly. The full amount of your payments will be applied to your principal balance once you’ve paid all the interest that accrued prior to March 13, 2020, and any fees (for defaulted loans).

You have two options for making payments:

  1. Leave your loans in the “administrative forbearance” status (meaning you are not required to make payments) and make payments anyway.

  2. Opt out of the administrative forbearance (payment suspension) and continue to make payments.

Staying in the payment pause and making payments

  • You are free to continue making payments on your loans during the payment pause.

  • Until the payment pause ends, you can pay more or less than your regular payment amount.

  • You will not be billed.

  • You may not be able to resume auto-debit payment during the payment pause.

  • Contact your loan servicer or visit your servicer’s website to make a payment.

Opting out of the payment suspension and continuing to make payments

  • You will be billed.

  • Auto-debit payments will resume.

  • Contact your loan servicer or visit your servicer’s website to

    • opt-out of the payment pause,

    • make a payment, or

    • find out how you can continue or start auto-debit payments.

  • Did you opt out of the payment pause and miss a payment? After your loans become 30 days past due, your loan servicer will place you back in the payment pause.

  • Did you opt out of the payment pause but now you can’t afford your payment? Contact your loan servicer as soon as possible. You and your servicer can discuss your options.

Contact your loan servicer or visit your servicer’s website to discuss your payment options.

Your loan payments will be paused, and your interest rate will stay at 0% until Dec. 31, 2022. For example, say your grace period ended on April 15, 2022. In this case, your payments would be suspended from April 15, 2022, through Dec. 31, 2022. The interest rate on your loans will stay at 0% throughout this period.

Interest on your loan builds up while you’re in school. Normally, your unpaid interest would capitalize (be added to your principal balance) at the end of your grace period. But your interest will not be added if your grace period ends between March 13, 2020, and July 1, 2023.

The Department of Education asked  servicers to undo   that has an effective date after March 13, 2020. Your  will reach out if they are reversing your capitalized interest.

Consider applying for an income-driven repayment (IDR) plan, which could make your monthly payment more affordable

Compare your available loan repayment options through Loan Simulator. You can also contact your loan servicer to make sure you’re on the best repayment plan for you.

Unless you ask for a different repayment plan, your loan servicer will put you on the Standard Repayment Plan.

Yes. But keep in mind, that consolidation can sometimes result in a higher interest rate for some of your loans. So you may find that your rate is higher than what it was before the 0% interest rate period began. Make sure you weigh the pros and cons of consolidating your loan.

Your loans have been placed into administrative forbearance (payment pause). If your cancer deferment would have ended after Dec. 31, 2022, your loans will be placed back into that deferment automatically on Dec. 31, 2022.

You will not need to recertify your cancer deferment before payments restart. The earliest you might be asked to recertify is July 2023.

Your loan servicer will contact you with your new recertification date before you need to recertify.

Have you moved, changed phone numbers, or gotten a new email address? If so, update your contact information in your profile on your loan servicer’s website and in your profile.

If you would like to recertify early, contact your loan servicer to request to do so.

Your lender or school may provide the 0% interest benefit should it choose to do so.

You can also become eligible for this benefit by consolidating your Federal Perkins or non-defaulted FFEL Program loans not held by ED into a Direct Consolidation Loan.

However, if you consolidate, keep in mind these things:

  1. After the 0% interest rate period ends, the interest rate on your loan may be higher than what you are currently paying.

  2. When you consolidate, any outstanding interest will capitalize, meaning that any outstanding interest is added to your principal balance.

Your servicer can provide you with information about how your loan balance, interest rate, and total amount to be paid would change if you consolidate. Make sure to weigh the pros and cons of consolidating to decide whether a Direct Consolidation Loan is right for you.

No, your interest will not capitalize when payments restart. In fact, interest will not capitalize during the payment pause and through July 1, 2023 (unless you consolidate your loans).

The Department of Education asked loan servicers to undo interest capitalization that has an effective date after March 13, 2020. Your loan servicer will reach out if they are reversing your capitalized interest.

Last Review and Update: Sep 09, 2022
Back to top