Editor’s Note: This article will be updated as new details are announced.
President Joe Biden announced a series of student debt relief measures on Wednesday, including debt forgiveness of up to $20,000 for some Americans.
The Department of Education estimates that about 27 million borrowers are eligible to receive up to $20,000 in assistance, helping borrowers struggling with their repayment obligation.
Here’s what you need to know about Biden’s student loan debt forgiveness.
Who is eligible for $20,000 in student loan debt forgiveness?
Borrowers who have received Pell Grants and earn less than $125,000 as individuals or less than $250,000 as married couples are eligible to receive $20,000 in student loan debt forgiveness. Your income is based on your 2020 or 2021 federal income tax return.
Who is eligible for $10,000 in student loan debt forgiveness?
Those who have not received Pell Grants but earn less than $125,000 as individuals or less than $250,000 as a married couple are eligible for $10,000 in student loan debt forgiveness. Your income is based on your 2020 or 2021 federal income tax return.
Are current students with loans eligible for the discount?
Students currently enrolled in school with loans may also qualify for relief as long as their parents’ income is below the eligibility threshold for single or married filers. Loans must have been issued before July 1 to be eligible.
What types of student loans are eligible for forgiveness?
Only federally backed student loans are eligible for forgiveness. Loans from private banks and lenders are not eligible. Graduate and undergraduate loans are eligible for cancellation as well as Parent PLUS loans taken out by parents or guardians, according to a press call with the administration.
How do I apply for student loan debt forgiveness?
You cannot apply yet. The Department of Education is working to put in place a simple application process for borrowers to apply for relief, according to the administration’s fact sheet. The app is expected to be available by the time the pause on federal student loan payments expires at the end of the year. (The forbearance was originally set to expire Aug. 31 until Biden extended it to Dec. 31.)
Income limits must be checked, which may cause a delay for applicants whose data is not in the Department of Education database. However, nearly 8 million borrowers could be eligible for automatic relief because their income data is already available to the Department of Education.
Is it the same as the PSLF (Public Service Loan Forgiveness) program?
No. Public Service Loan Forgiveness provides student debt forgiveness to those who have worked at least 10 years in public service jobs with federal, state, local organizations or certain non-profit organizations such as teachers, nurses, doctors, lawyers and other professionals. .
How can I stay up to date on the student loan forgiveness application process?
Borrowers can receive notifications when the app is available by signing up for StudentAid.gov/debtrelief.
What happens to my payments if I don’t qualify for the rebate or if the rebate doesn’t cancel all my debt?
Biden also extended the pause or forbearance on federal student loan repayments through Dec. 31. The relief was originally scheduled to expire on August 31. elimination of $10,000 in debt.
Is canceled student loan debt taxable?
Not at the federal level. This debt relief will not be considered taxable income for federal income tax purposes due to a provision of the US bailout enacted in March 2021.
Ronda is a senior personal finance reporter for Yahoo Money and an attorney with experience in law, insurance, education and government. Follow her on Twitter @writesronda