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How to Apply for Biden’s Student Loan Forgiveness

How to Apply for Biden’s Student Loan Forgiveness

On August 24, 2022, President Biden announced an executive order to forgive up to $20,000 in federal student loan debt. The executive order is a heated topic, especially because we recently printed trillions of dollars in COVID-19 stimulus money, peaking inflation at 9.1 percent in June 2022.

Biden enacted the Hero’s Act as the authority for this student debt plan to circumvent Congress. At best, he will succeed, and this loan forgiveness will be short-lived. Once federal student loan repayment recommences, all COVID-19 stimulus will end, including the ability to earn Biden’s loan forgiveness will expire. It won’t matter that your paperwork has been submitted; if you weren’t approved by then, the authority to forgive your loans would have passed.

Republicans are readying lawsuits to block Biden’s student loan forgiveness, alleging the White House’s move to cancel student debt without Congress is illegal.

How to Apply for Biden’s Student Loan Forgiveness

Before we get started, let’s discuss what types of federal student loans qualify for Biden’s plan.

1. Determine Who Qualifies for Biden’s student loan forgiveness

Covered student loans include undergrad, graduate, and Parent PLUS loans. As with all federal student loan forgiveness programs, only government-held federal student loans are eligible. Student loans qualify as Direct Loans, Direct Consolidation Loans, and government-held FFELP loans.

If you had federal student loans that benefited from the federal student loan repayment pause due to COVID-19, chances are those loans will qualify. The federal student loan repayment pause will terminate after December 31, 2022.

Student loans that don’t qualify

There are talks that the Education Department is “assessing” whether private student loans can benefit from Biden’s debt cancellation. We feel that this is wishful thinking.

Remember, the authority to enact Biden’s plan is The Heroes Act, an emergency COVID-19-related stimulus. Once repayment on federal student loan forgiveness recommences, it’s safe to say Biden’s authority for debt cancellation in this manner will expire.

As with all federal student loan forgiveness programs, private student loans aren’t affected by federal policy, so these loans don’t qualify.

In addition, commercially-held FFEL program federal student loans are not covered. 

2. How much debt cancellation will I receive?

Federal Pell Grant recipients will get up to $20,000 in Biden’s student loan forgiveness.

Biden’s plan would offer enhanced relief to Federal Pell Grants recipients. You could qualify for up to $20,000 in debt cancellation of qualifying federal student loans. Since only low-income families qualify for Pell Grants, not too many borrowers will benefit from this larger forgiveness amount.

Most borrowers will receive up to $10,000 in student loan forgiveness.

While not many will benefit from the larger $20,000 forgiveness amount, tens of millions of borrowers will qualify for $10,000 in Biden’s student loan forgiveness. If your federal student loans allow for the federal student loan repayment pause, you may be eligible for up to $10,000 of student loan forgiveness.

3. Be aware of the income limitations of Biden’s student loan forgiveness

Higher-income earners won’t qualify for debt cancellation. Biden’s student loan forgiveness sets limitations on income. To qualify, you must earn less than $125,000/year for single tax filers; $250,000 per year for married tax filers. Guidance from the Department of Education states that they will look at income for tax years 2020 and 2021.

4. Biden’s student loan forgiveness will be automatic, or so they say.

Guidance from the Department of Education indicates that Biden’s debt cancellation will be automatic. Borrowers who already have their income information on file with their loan servicer through income certification may not have to take action.

We are urging borrowers not to rely on automatic forgiveness. Most borrowers were automatically placed on repayment pause by their loan servicer for federal student loans from 2020-2022, which means many borrowers didn’t bother recertifying their income. Why recertify income-driven repayment if you’re not required to make payments and no interest accrues?

If you didn’t recertify your income, chances are your income information isn’t on file, and you won’t earn automatic forgiveness. And as mentioned above, by the time you figure that out, the authority to forgive your student loans may have expired.

5. Calculate any potential tax liability from any debt cancellation

President Biden indicated that his student loan forgiveness wouldn’t get taxed at the federal level. However, several states, including California, Mississippi, North Carolina, and Indiana, recently confirmed that they would treat Biden’s student loan forgiveness as income for state tax purposes.

According to the Tax Foundation, thirteen states could treat President Biden’s student loan forgiveness plan as taxable income to borrowers. These states are Arkansas, Hawaii, Idaho, Kentucky, Massachusetts, Minnesota, Mississippi, New York, Pennsylvania, South Carolina, Virginia, West Virginia, and Wisconsin.

6. Apply for Biden’s student loan forgiveness manually

If Biden’s student loan forgiveness plan isn’t blocked, we urge borrowers to apply manually. The window to earn forgiveness appears short-lived, and there might be little room for error. Unfortunately, the application for forgiveness isn’t yet available, and it should be available in October.

Sign up for alerts by checking off “NEW!! Federal Student Loan Borrower Updates,” from the US Department of Education’s website.

7. Sign up for our newsletter for more information and updates

We plan on covering Biden’s student loan forgiveness plan and proposed changes to income-driven repayment plans. For up-to-date information and updates, sign up for our newsletter.




For Educational Purposes Only – Not to be relied upon as financial, tax, or legal advice. The views expressed are those of the presenting party and all data is derived from sources believed to be accurate.

Securities and advisory services offered through Independent Financial Group, LLC (IFG), a Registered Investment Adviser. Member FINRA/SIPC. Vaylark Financial Services and IFG are unaffiliated entities. Neither Independent Financial Group (IFG) nor any of its affiliates offer lending or repayment advice. The views expressed are those of the presenting party and may not express those of IFG or its affiliates. The information presented is for educational purposes only and is derived from sources assumed to be reliable. It is not to be relied upon as tax, legal, or financial advice, nor used for the purpose of avoiding any tax obligations. Please contact a qualified professional regarding your individual circumstances.

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Tom Martin, is a financial advisor at Vaylark Financial Services, based in Hartford, Connecticut. He practices in the area of private wealth management offering comprehensive financial planning, custom investment portfolios, tax reduction strategies, risk management, estate and legacy planning, as well as advises on executive compensation and business owner profitability.


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