9 Things to Know About Student Loan Forgiveness

Posted 10/26/2022

If you have questions about the federal government’s student loan forgiveness and debt relief efforts, you’re not alone. Every day Student Connections counsels borrowers asking how student loan debt relief applies to them. 

Here are answers to some of the most commonly asked questions.

1. “How Do I Know if I Qualify for Student Loan Forgiveness?”

You can receive debt relief if: 

• You have eligible federal loans. See the next question for details on what loans qualify.
• Your reported annual federal income for 2020 OR 2021 was below $125,000 (individual or married, filing separately) or $250,000 (married, filing jointly or head of household). 

There are two important details to note about the income requirement:

• You only have to meet the conditions for ONE year (2020 or 2021), NOT both years.
• Your parent’s income will be used if you received a federal student loan during the 2021-22 academic year and were considered a dependent student for financial aid purposes. However, you should still enter your individual income when applying. Federal Student Aid (FSA) will email both you and your parent instructions on how to complete the process later on.

2. “Are My Loans Eligible for Forgiveness?”

To determine if your loans qualify for this this one-time debt relief, you need to know what kinds of loans you have. 

Find out by logging into StudentAid.gov and selecting “My Aid” in the dropdown menu. Check to see if you have federal student loans owned by the Dept. of Education (ED) and disbursed prior to July 1, 2022. 

Eligible Loans Include: 

• Direct Loans – including subsidized, unsubsidized, Parent PLUS, Grad PLUS, and consolidated* loans 
• Federal Family Education Loans (FFEL) Program loans held by ED or in default at a guaranty agency 
• Federal Perkins Loans held by ED 
• Defaulted loans – including Stafford, Parent PLUS, and Grad PLUS loans held by ED or commercially serviced; and Perkins loans held by ED

*Consolidated loans are eligible only if ALL underlying loans were disbursed prior to July 1, 2022, and were consolidated into a Direct Loan prior to Sept. 29, 2022.

Loans That Are NOT Eligible:

• Private student loans
• Private consolidation loans (including those that paid off federal student loans)
• School-held Perkins Loans
• Commercially-held FFELP loans (including FFELP Consolidation loans)
• Any new loans first disbursed on or after July 1, 2022

If you still need help determining the eligibility of your loans, contact your loan servicer. The FSA website also provides FAQs about qualifying loans.

3. “How Much Student Loan Forgiveness Will I Get?”

If you meet the loan type and income requirements, you will qualify for up to $10,000 in debt relief. If you received at least one Pell Grant, you may qualify for an additional $10,000 in relief (up to $20,000 total debt relief).

4. “How Do I Know if I Received a Pell Grant?”

To see if you had a Pell Grant, log in to StudentAid.gov and go to “My Aid.”

5. “What Do I Have to Do to Get the Forgiveness Applied?”

Some borrowers automatically qualified, but most have to complete a short application. 

If you automatically qualified, you should have received an email and/or text message from FSA. 

If you weren’t notified of automatic approval and you want to apply for this relief, you should complete the application as soon as possible. It’s quick and easy. You won’t need to log in or provide any documentation.

6. “Will Student Loan Forgiveness Be Taxed?”

The one-time student loan debt relief won’t be taxed at the federal level. Some states may choose to apply taxes. Check with your state of residence for the latest information.

7. “What if I Made Payments on My Student Loans During the Pause?”

If you made any voluntary payments on your federal student loans during the payment pause, and would now qualify for more debt relief than you currently owe, you can get refunded for those payments. 

Automatic refunds will be applied if your voluntary payments during the payment pause brought your balance below the maximum debt relief amount you’re eligible to receive but you did NOT pay off your loan in full. For example:

• Alex owed $10,000 before the payment pause.
• They paid $2,000 during the pause.
• They qualify for $10,000 in forgiveness, but only owes $8,000.
• Alex will automatically be refunded the $2,000 they paid during the pause.

If you meet the eligibility requirements to receive debt relief and you paid your loan in full during the payment pause, you will need to contact your loan servicer and request a refund. You can apply for debt relief once the refund has been applied. Loan servicers have indicated it will take 6-8 weeks to process the refund.

If you made voluntary payments and still owe more than what you’re eligible to receive in debt relief, you don’t need to request a refund of your payments.

8. “How Can I Avoid Student Loan Forgiveness Scams?”

Student loan forgiveness scams are on the rise. The most important thing to remember is that you NEVER have to pay to receive student loan debt relief from FSA. Read this article to learn more ways to protect yourself. 

9. “Who Can I Contact for Help with Student Loan Forgiveness?”

You can find all of the details about federal student loan debt relief and how to apply for it at StudentAid.gov/DebtRelief. For answers to more specific questions, contact your loan servicer or Student Connections.

Student Connections provides federal student loan repayment counseling on behalf of schools. Call us at (866) 311-9450, Monday through Friday, 9:00 a.m. to 6:00 p.m. ET, or email us at intouch@studentconnections.com.