How to Qualify for Student Loan Forgiveness in 2022

It’s no secret that the cost of college has increased faster than the rate of inflation for many years. According to The College Board, inflation-adjusted tuition at four-year, public universities has increased 158% between 1991-92 to 2021-22. So while it may have been easier for previous generations to pay for college with scholarships and a part-time job, many current college graduates turn to student loans.

Student Loan Forgiveness

With more and more college graduates entering the workforce with significant amounts of student loan debt, calls have grown for some sort of student loan forgiveness. Student loans, and the cost of college generally have become mainstays in the political planks of various candidates for state and federal offices.

There are a wide variety of opinions on whether student loans should be forgiven at all, and if so, to what degree. Some people feel that forgiving student loans benefits mostly relatively well-off people at the expense of those who didn’t go to college. Others feel forgiving student loan debt isn’t fair to those who scrimped and saved to pay off their debts. The contrasting opinion is that many student loan borrowers were taken advantage of or have loans that are placing a real and distinct hardship on their lives.

President Biden Announces Student Loan Forgiveness in August 2022

The Biden Administration has implemented a variety of different plans to help give relief to those with student loans for higher education. Payments on federal student loans have been paused since the Coronavirus Aid, Relief and Economic Security Act (The CARES Act) was signed in March 2020. Currently, federal student loan payments are paused through December 2022, with payments beginning again in January 2023.

The Biden-Harris Administration’s Student Debt Relief Plan

In August 2022, the administration announced the Biden-Harris Administration’s Student Debt Relief Plan. Under this plan, qualified borrowers can have up to $10,000 of their student loan debt forgiven. Additionally, anyone who received a Pell Grant in college will be eligible for an additional $10,000 in forgiveness ($20,000 total). Currently, the Biden-Harris plan only forgives federal student loan debt held by the Department of Education.

This student loan forgiveness is limited by your income — you’ll need to have an annual income under $125,000 for individuals or $250,000 if you’re married. In addition, your student loan forgiveness amount is capped at the total amount that you owe. So if you’re eligible for $20,000 in forgiveness but you only owe $13,000, you’ll only have $13,000 forgiven.

While the announcement of up to $20,000 in student loan forgiveness was the major part of the plan announced by President Biden, the plan also introduced a few ways to make the student loan repayment process more manageable. This includes the following:

Requiring borrowers to pay only 5% of their monthly discretionary income, down from 10%
Raising the amount of income that is considered non-discretionary income, to ensure that borrowers earning under 225% of the federal poverty level will not have to make any payments
Forgiving loan balances after 10 years of payments for borrowers with loan balances under $12,000 (down from 20 years)
Covering the borrower’s unpaid monthly interest under income-driven repayment plans

How to Qualify for Student Loan Forgiveness

The Department of Education has stated that they already have income data on over 8 million borrowers. This means that these borrowers will receive their forgiveness automatically, with no need to do anything. If you’re not sure if the Department of Education has your income information, or if your income has changed, there will be a form that you can fill out starting in early October. Relief to eligible borrowers will be granted in approximately four to six weeks. You should make sure and apply before mid-November if you want your application to be processed before the end of the year (when payments are expected to resume again).

The Bottom Line

The Biden Administration and the U.S. Department of Education have announced up to $20,000 in student loan forgiveness for federal student loan borrowers whose incomes are less than $125,000 ($250,000 for households). Many eligible borrowers will have their loan amounts adjusted automatically, but there will also be an application available starting in October. The administration has also extended the forbearance period for federal student loans through the end of 2022 as well as made adjustments to the loan repayment process to make it more manageable for low and middle-income borrowers.

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Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids. More from Dan Miller