Biden Student Loan Forgiveness Proposal

Update: Biden's plan to forgive up to $20,000 in student loans is currently on hold due to court orders. The Supreme Court is set to rule on the lawsuit sometime in early Summer 2023.

On August 24, 2022, President Biden announced that he was going to forgive up to $20,000 in student loan debt for qualifying borrowers. While the details of the program aren't completely official yet (and they may be challenged in court because he might not be able to do it via executive order), here's what we know today:

• $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education (this typically means Direct student loans, and certain federally-held FFEL and Perkins Loans).
• $10,000 in debt cancellation to non-Pell Grant recipients.

There will be an income-cap to qualify. You must have an adjusted gross income (AGI) of less than $125,000 for individuals, and $250,000 for married couples and head-of-household.

The maximum amount of forgiveness cannot exceed your current loan balance. So, if you only have a $9,000 balance, that would be the maximum amount of forgiveness. You can request a refund of your student loan payments if you made voluntary payments during the Covid-19 payment pause.

It also appears there will be a cutoff of loans made before June 30, 2022. There is also a consolidate cut-off date of September 29, 2022. However, that June 30 date does mean that current college students (not Freshmen, but other years) can get loans forgiven even if they haven't graduated yet.

While some borrowers will see this applied automatically, the rest will need to apply (and potentially verify their income). You can fill out the One-Time Student Loan Forgiveness Application here. However, the application has been temporarily removed due to various lawsuits relating to the legality of Biden's student loan forgiveness.

You can read the full announcement here and we will update this as we get more information.

Read our full guide to President Biden's $10,000 to $20,000 Student Loan Forgiveness Plan.

Repayment Plan Based Student Loan Forgiveness

These student loan forgiveness plans are tied to your student loan repayment plan. If you're on one of these qualifying repayment plans, you'll be eligible for student loan forgiveness at the end of your repayment term.

Most borrowers qualify for student loan forgiveness through one of these "secret" ways. The secret is simple: sign up for a qualifying student loan repayment plan, and any remaining balance on your loan will be forgiven at the end of the plan.

It's important to note that these income-driven repayment plan options due have some criteria that must be met to be eligible. If you have no remaining balance at the end of the loan term, you get no student loan forgiveness.

It's also important to note that the student loan forgiveness on these plans is typically considered taxable income. However, President Biden made all loan forgiveness and discharge tax-free Federally through December 31, 2025. Learn more about taxes and student loan forgiveness here.

You can apply for these repayment plans with student loan forgiveness by calling your lender or going online to StudentLoans.gov.

Pay As You Earn (PAYE)

The Pay As You Earn Repayment Plan (PAYE) is very similar to the IBR Plan. With PAYE, you will not pay more than 10% of your discretionary income, and your loan will also be forgiven after 20 years.

The key difference is that only certain loans going back to 2007 qualify for this plan.

With PAYE, you loan repayment will never exceed the payment of the 10 year standard repayment plan, and your loan will also be forgiven at the end of the term.

For both IBR and PAYE, it might make sense to file your tax return married filing separately to qualify.

Revised Pay As You Earn (RePAYE)

RePAYE is a modified version of PAYE that has become available to borrowers after December 17, 2015. Unlike PAYE, which was available for loans taken out after 2007, RePAYE is open to all Direct Loan Borrowers, regardless of when the loan was taken out.

The repayment plan still caps your payment at 10% of your discretionary income, and the loan will be forgiven after 20 years.

The RePAYE plan also includes an interest subsidy that would help cover 50% of the interest in cases where the new payments cannot keep up with the accruing interest.

You can learn more about RePAYE and the interest subsidy here.

Income Contingent Repayment (ICR)

The Income Contingent Repayment Plan (ICR) is a little different than IBR or PAYE. There are no initial income requirements for ICR, and any eligible buyer may make payments under this plan. Under this plan, your payments will be the lesser of the following:

• 20% of your discretionary income
• What you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income

With the ICR plan, your loans will be forgiven at the end of 25 years.

It's important to note that with this plan, your payments could end up being higher than the standard 10 year repayment plan. Since you have to submit your income every year, if your income rises high enough, your payment will adjust accordingly.

Career-Based Student Loan Forgiveness Options

Depending on what type of career path you choose, you could qualify for various different student loan forgiveness options.

The most popular option is Public Service Loan Forgiveness. The reason is that this plan offers the biggest amount of forgiveness in the shortest period of time - tax free. It's also open to a lot of different jobs under the umbrella of "public service".

However, it's not the only career-based option.

Public Service Loan Forgiveness (PSLF)

Public Service Loan Forgiveness Program will grant student loan forgiveness on qualifying loans after 120 payments (10 years).

This is the number one best way to get student loan forgiveness if you're eligible.

The great thing about public service is that the definition is very broad. Qualifying employment is any employment with a federal, state, or local government agency, entity, or organization or a not-for-profit organization that has been designated as tax-exempt by the Internal Revenue Service (IRS) under Section 501(c)(3) of the Internal Revenue Code (IRC). The type or nature of employment with the organization does not matter for PSLF purposes.

For example:

• Government Workers (Federal, State, Local)
• Emergency management
• Military service
• Public safety or law enforcement services
• Public health services
• Teachers (Check out student loan forgiveness for teachers)
• Public education or public library services
• School library and other school-based services
• Public interest law services
• Early childhood education
• Public service for individuals with disabilities and the elderly

The organization must not be a labor union or a partisan political organization.

The other aspect of PSLF is that you must be on a qualifying student loan repayment plan. Find out the best student loan repayment plans here.

Or, check out our guide: The Ultimate Guide To Public Service Loan Forgiveness (PSLF).

Temporary Expanded PSLF (TEPSLF)

If you're looking for Temporary Expanded Public Service Loan Forgiveness, check out this guide: Temporary Expanded PSLF (TEPSLF). This program is specifically created for people who have Direct Loans, had qualifying employment, but were not on the correct repayment plan to qualify.

Biden Waiver

If you're looking information about the special Biden Waiver that expires in October 2022, then check out this guide on What To Do With Your FFEL Loans? This Waiver is specifically designed to help people who have the wrong loan type qualify for PSLF by consolidating into a Direct Student Loan.

The National Health Service Corps (NHSC) offers tax-free loan repayment assistance to support qualified health care providers who choose to take their skills where they’re most needed.

Licensed health care providers may earn up to $50,000 toward student loans in exchange for a two-year commitment at an NHSC-approved site through the NHSC Loan Repayment Program (NHSC LRP).

Accepted participants may serve as primary care medical, dental, or mental/behavioral health clinicians and can choose to serve longer for additional loan repayment support.

Priority consideration is given to eligible applicants whose NHSC-approved site has a HPSA score of 26 to 14, in descending order. Eligible applicants may receive up to $50,000 in loan repayment for an initial service commitment until funding is exhausted.

You can learn more about this program here.

National Institutes of Health (NIH) Loan Forgiveness

U.S. Military Student Loan Forgiveness Options

Serving our country can be a great career. And there are good incentives to sign up and serve. Student loan forgiveness has been one of these programs.

If you're considering a career in the military, find out if they will help pay down or eliminate your student loan debt. You can also look at our full guide to military and veteran education benefits.

Air Force College Loan Repayment Program

Alabama - Alabama is one of the few states that doesn't have a student loan forgiveness program.

Alaska - Alaska currently has one program.

Arizona - Arizona currently has three programs.

Arkansas - Arkansas currently has two programs.

California - California currently has three forgiveness programs.

Colorado - Colorado currently has three forgiveness programs.

Connecticut - Connecticut is one of the few states that doesn't have a student loan forgiveness program.

Delaware - Delaware currently has one student loan forgiveness program.

Florida - Florida currently has two student loan forgiveness programs.

Georgia - Georgia currently has one student loan forgiveness program.

Hawaii - Hawaii currently has one student loan forgiveness program.

Idaho - Idaho currently has one student loan forgiveness program.

Illinois - Illinois currently has four student loan forgiveness programs.

Indiana - Indiana currently has one student loan forgiveness program.

Iowa - Iowa currently has six student loan forgiveness programs.

Kansas - Kansas currently has three student loan forgiveness programs.

Kentucky - Kentucky currently has one student loan forgiveness program.

Louisiana - Louisiana currently has three student loan forgiveness programs.

Maine - Maine currently has five student loan forgiveness programs.

Maryland - Maryland currently has three student loan forgiveness programs.

Massachusetts - Massachusetts currently has one student loan forgiveness program.

Michigan - Michigan currently has two student loan forgiveness programs.

Minnesota - Minnesota currently has ten student loan forgiveness programs.

Mississippi - Mississippi currently has one student loan forgiveness program.

Missouri - Missouri currently has three student loan forgiveness programs.

Montana - Montana currently has three student loan forgiveness programs.

Nebraska - Nebraska currently has one student loan forgiveness program.

Nevada - Nevada currently has one student loan forgiveness program.

New Hampshire - New Hampshire currently has two student loan forgiveness programs.

New Jersey - New Jersey currently has three student loan forgiveness programs.

New Mexico - New Mexico currently has three student loan forgiveness programs.

New York - New York currently has nine student loan forgiveness programs.

North Carolina - North Carolina currently has three student loan forgiveness programs.

North Dakota - North Dakota eliminated all their student loan forgiveness programs.

Ohio - Ohio currently has two student loan forgiveness programs.

Oklahoma - Oklahoma currently has three student loan forgiveness programs.

Oregon - Oregon currently has three student loan forgiveness programs.

Pennsylvania - Pennsylvania currently has two student loan forgiveness programs.

Rhode Island - Rhode Island currently has three student loan forgiveness programs.

South Carolina - South Carolina currently has one student loan forgiveness program.

South Dakota - South Dakota currently has one student loan forgiveness program.

Tennessee - Tennessee is one of the few states with no programs.

Texas - Texas currently has nine student loan forgiveness programs.

Utah - Utah is one of the few states with no student loan forgiveness programs.

Vermont - Vermont currently has five student loan forgiveness programs.

Virginia - Virginia currently has three student loan forgiveness programs.

Washington - Washington currently has one student loan forgiveness program.

West Virginia - West Virginia is one of the few states with no student loan forgiveness programs.

Wisconsin - Wisconsin currently has one student loan forgiveness program.

Wyoming - Wyoming currently has two student loan forgiveness programs.

The District of Columbia - Washington D.C. currently has two student loan forgiveness programs.

If you volunteer with AmeriCorps NCCC, AmeriCorps State and National, or AmeriCorps VISTA and complete a 12-month term, you could be eligible to receive assistance up to the value of a Pell Grant - which is currently $5,920.

There are benefits available to people who complete full time service all the way down to affiliate service (just 100 hours).

You can learn more about this program here.

Student Loan Discharge Options

There are also ways to get your student loans discharged in some circumstances. We consider student loan discharged to be a little bit different than forgiveness, both due to the nature of the way the loan is eliminated and the potential taxability surrounding it.

There are various discharge options you may qualify for.

Closed School Discharge

This program is for borrowers who could not complete their program of study because the school closed while they were enrolled or within 120 days of their attendance.

However, to be eligible, it also means that you were not able to transfer your credits to another eligible institution.

If you think this may apply to you, find the appropriate contact here.

False Certification (Identity Theft) Discharge

If you have loans taken out in your name that weren't yours - due to identity theft or other false certification (this means someone forged your signature or information on a student loan), you are eligible to have your student loans discharged.

There are a lot of steps you need to take if your identity was stolen and student loans were taken out. You should also file a police report. Check out our full guide to identity theft and student loans.

You can find the false certification discharge application here.

Death Discharge

If you have Federal student loans, they are discharged upon death of the borrower. Even for Parent PLUS Loans, if the student dies, the loans will still be discharged.

That doesn't mean there aren't complications - that could be costly. Read this guide to what happens to your student loans when you die.

If you have private student loans, the cosigner is still likely 100% responsible for the balance of the loan. It's one of the reasons why we recommend private loan cosigners get a life insurance policy on the borrower.

You can learn more about student loan discharge due to death here.

Total and Permanent Disability Discharge

If you become totally and permanently disabled, you may be eligible to have your student loans discharged.

To qualify, a physician must certify that the borrower is unable to engage in substantial gainful activity due to a physical or mental impairment. This impairment must be expected to result in death or last for a continuous period of at least 60 months, or it must have already lasted for a continuous period of at least 60 months.

Any remaining balance on your Federal student loans will be discharged from the date that your physician certifies your application.

The Secretary of Veteran Affairs (VA) can also certify the borrower to be unemployable due to a service-connected disability. If the VA certified your application, any Federal student loan amounts owed after the date of the service-related injury will be discharged, and any payments you made after your injury would be refunded to you.

Borrowers may also be eligible for discharge if they have been certified as disabled by the Social Security Administration (SSA) where the notice of award for Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) benefits indicates that the borrower’s next scheduled disability review will be within 5 to 7 years.

If you were approved due to the SSA determination, any remaining balance on your Federal student loans would be discharged. This benefit recently became tax-free thanks to Trump's student loan reform.

You can learn more about Disability Discharge here.

Bankruptcy Discharge

Many people falsely believe that student loans cannot be discharged in bankruptcy.

The fact is, borrowers may be eligible to have their student loans discharged in bankruptcy - but it's rare. You will have to prove to the judge that repaying your loans would be an undue hardship.

This standard requires you to show that there is no likelihood of any future ability to repay. This key fact - future ability - is hard because the future is a long time. Let's say you're 35 years old. Can you really say that over the next 50 years you'll never earn enough to repay the loans? It's a tough standard.

As a result, it can be difficult to discharge Federal student loans through bankruptcy—but not impossible.

Furthermore, many lawyers (and even some judges) are not aware of how to handle student loans and bankruptcy. You should ensure that you have an attorney fully versed in the requirements if you are thinking about pursing this route.

Perkins Loan Cancellation Options

Perkins loans operate very differently that most student loans. These loans are offered and administered by where you attended school. They also have a lot more loan forgiveness options than other loan types.

Perkins loans have unique requirements for loan cancellation based on the field you work in. Schools award these Federal loans to high-need students attending or planning to attend college. Make sure you fill out the FAFSA each year and check your financial aid award to see if you qualify.

Depending on the profession (see list below), Perkins loan borrowers can have up to 100% of their loan cancelled over the course of 5 years (except when indicated).

Here’s how it works:

• 15% of their principal balance and accrued interest can be cancelled after their first and second year of qualifying service.
• 20% of their principal balance and accrued interest can be cancelled after their third and fourth year.
• 30% of their principal balance and accrued interest can be cancelled after their fifth year.

Perkins loans also offer concurrent deferment if you are performing qualifying service.

Combining that postponement with these cancellation options means you could potentially never have to make payments on these loans. That's a fantastic deal!

The professions eligible for cancellation and the requirements are listed below.

Active-Duty Imminent Danger Area: You must serve in the U.S. Armed Forces in a hostile fire or imminent danger area. You may receive forgiveness for up to 50% of your outstanding loans if your active duty ended before August 14, 2008. You may receive up to 100% forgiveness of your outstanding loans if your active duty includes or began after August 14, 2008.

Attorney: You must be a full-time attorney employed in a Federal or community defender organization. You must perform qualified service that began on or after August 14, 2008. You may receive up to 100% student loan forgiveness.

Child or Family Services Agency: You must be a full-time employee of a public or non-profit child or family services agency providing services to high-risk children and their families from low-income communities. You may receive up to 100% student loan forgiveness.

Firefighter Or Law Enforcement: You must be a full-time firefighter, law enforcement officer, or corrections officer, whose service began on or after August 14, 2008. You may receive up to 100% student loan forgiveness.

HeadStart: You must be a full-time staff member in the education component of a HeadStart program. You may receive up to 100% forgiveness of your loans, paid out as 15% of the principal balance and accrued interest for each year of service.

Intervention Services Provider: You must be a full-time qualified professional provider of early intervention services for the disabled. Service must have begun on or after August 14, 2008. You may receive up to 100% student loan forgiveness.

Librarian: You must be a librarian with a master’s degree working in a Title I-eligible elementary or secondary school or in a public library serving Title I-eligible schools (find the list of qualifying schools here). You must have been employed on or after August 14, 2008. You may receive up to 100% student loan forgiveness..

Nurse or Medical Technician: You must be a full-time nurse or medical technician. You may receive up to 100% student loan forgiveness. Check out our full guide to student loan forgiveness for nurses.

Pre-kindergarten or Child Care: You must be a full-time staff member in a pre-kindergarten or child care program that is licensed or regulated by a state. You must have been employed on or after August 14, 2008. You may receive up to 100% student loan forgiveness.

Speech Pathologist: You must be a full-time speech pathologist with a master’s degree working in a Title I-eligible elementary or secondary school. You may receive up to 100% student loan forgiveness.

Teacher - Shortage Area: You must be a full-time teacher of math, science, foreign languages, bilingual education, or other fields designated as teacher shortage areas. You may receive up to 100% forgiveness of your loans.

Teacher - Special Education: You must be a full-time special education teacher of children with disabilities in a public school, nonprofit elementary or secondary school, or educational service agency. If the service is at an educational service agency, it must include August 14, 2008, or have begun on or after that date. You may receive up to 100% student loan forgiveness.

Tribal College Faculty: You must be a full-time faculty member at a tribal college or university. Your service must include August 14, 2008, or have begun on or after that date. You may receive up to 100% student loan forgiveness.

Notice For Private Student Loan Debt

Sadly, if you have private loans, there aren't any specific ways to get student loan forgiveness. Private student loans act much more like a car loan or mortgage - in that you pay your amount and don't have any special programs with your loan.

There are potentially some options, and we break them down here: Help With Private Student Loan Debt.

If you're looking for ways to lower your private student loan payment, you might consider student loan refinancing. You can potentially lower your interest rate or change your repayment length - both which could lower your monthly payment significantly (and maybe save you money).

We recommend Credible to compare refinancing options. You can see if it makes sense to refinance in as little as 2 minutes. Plus, College Investor readers get up to a $1,000 gift card bonus when they refinance with Credible. Check out Credible here.

Or, check out our list of the best places for student loan refinancing.

Final Thoughts

The bottom line is that there are a lot of different student loan forgiveness options. We've shown you over 80 different ways to get student loan forgiveness.

It sounds like it could be confusing, but it doesn’t have to be. Remember, you can sign up for these programs for free at StudentAid.gov.

Also, if you think you need navigating these options or your student loans, you can look into getting professional help. We recommend using Chipper, which is an app that helps you organize and pay down your student loans, as well as apply for loan forgiveness you qualify for. Plus, they have a student loan concierge that will help you for a small fee. Check out Chipper here >>

If you need more in-depth assistance, check out the Student Loan Planner. This is a group of CFPs that are experts in student loan debt and can help you put together a total financial plan that addresses your student loans and life goals. It's pricier, but for complex situations or large amounts of debt, it can be worth it. Check out the Student Loan Planner here >>

Let us know if you've taken advantage of any of these programs! We'd love to know how much you've saved.