At the end of August President Biden announced a plan to forgive up to $20,000 in Federal Direct Student Loans for borrowers with income below $125,000 per year.  Shortly after that announcement, the legal challenges aiming to stop the program before it started came rolling in.  This past week a couple of those legal challenges were dismissed, which makes me think this forgiveness might actually happen (but then an appeals court blocked progress on Friday evening, so we can’t be sure).  Without any fanfare, the application for debt relief opened this past week.  And people have been submitting the application in droves!

You may be eligible to receive forgiveness of up to $10,000 if you meet the following conditions:

• You have an outstanding federal direct loan (subsidized, unsubsidized, graduate PLUS, parent PLUS, or direct consolidation) that disbursed prior to June 30, 2022.  If you borrowed your first loan for the current academic year, you are out of luck.
• Your adjusted gross income from your 2020 or 2021 tax return was less than $125,000 for single filers, or less than $250,000 for families.  You can use either year’s income—whichever is lower.  If you were classified as a dependent student for the 2021-22 academic year, then your family’s income will be used rather than your own to determine your eligibility.

You may be eligible to receive up to an additional $10,000 in forgiveness (for a total of up to $20,000) if you received a Pell grant as an undergraduate student.  If you don’t recall whether you received a Pell grant, you can find out by logging in at http://studentaid.gov and selecting “My Aid.”  The “Grants” tab will reveal whether you received a Pell grant.

You may not need to do anything to receive this forgiveness.  If the Department of Education already has your income information on file, your forgiveness can be processed without your having to take any action.  If you submitted a 2022-23 FAFSA, you should be all set (though the Department of Education may follow up for parent information if you were a dependent student for 2021-22).  If you submitted 2020 or 2021 income information to your loan servicer in order to be on an income driven payment plan, then you should also be all set.

If your income info is not already at hand, you will need to submit the application for debt relief before December 31, 2023 in order to receive this relief.  The form is very simple.  If you know your name, date of birth, email address, phone number, and Social Security Number you should be able to complete it in two minutes or less.  After submitting the form you should receive a confirmation email. The Department of Education will contact you if more information is needed.  Once the application is approved, you will be notified, and then your loan servicer will be in touch to let you know what your new loan balance is and what your new monthly payment amount will be.

It sounds really simple.  I hope it actually turns out to be that simple.  But it certainly can’t hurt to try.  If you  are eligible….bring on the debt relief!!