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President Biden Announces Student Loan Forgiveness Plan

December 9, 2022

The Biden-Harris Administration and the U.S. Department of Education have announced a three-part plan to help working and middle-class federal student loan borrowers' transition back to regular payment as pandemic-related support expires. This plan includes loan forgiveness of up to $20,000 for Pell-Grant recipients and up to $10,000 for non-Pell Grant recipients.

Under the American Rescue Plan Act of 2021, individual taxpayers may exclude from gross income the amount of qualified student loan on post-secondary education expenses that is cancelled or discharged after December 31, 2020, and before January 1, 2026. Qualified student loans include loans for post-secondary education provided by the government or educational institution, private education loans, original and refinanced loans from tax-exempt organizations with a public service requirement, and refinanced loans. There are exceptions for certain types of loans or conditions.

Student Loan Debt Relief Plan

Part 1. Final Extension of the Student Loan Repayment Pause

Due to the economic challenges created by the pandemic, the Biden-Harris Administration has extended the student loan repayment pause several times. Because of this, no one with a federally held loan has had to make loan repayments since January 2021. The final pause is extending through December 31, 2022, with repayments resuming in January 2023.

Part 2. Providing Targeted Debt Relief to Low- and Middle- Income Families

To smooth the transition back to repayment and help borrowers at highest risk of delinquencies or default once payments resume, the U.S. Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education and up to $10,000 in debt cancellation to non-Pell Grant recipients. Borrowers are eligible for this relief if their individual income is less than $125,000 or $250,000 for married filed jointly.

In addition, borrowers employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all their student loans forgiven through the Public Service Loan Forgiveness (PSLF) program. This is because of time-limited changes that waive certain eligibility criteria in the PSLF program. These temporary changes expired on October 31, 2022.

Part 3. Make the Student Loan System More Manageable for Current and Future Borrowers

Income-based repayment plans have long existed within the U.S. Department of Education. However, the Biden-Harris Administration is proposing a rule to create a new income-driven repayment plan that will substantially reduce future monthly payments for lower- and middle-income borrowers.

We will keep you informed of any further developments. Contact us if you want help determining if you are eligible for the student debt relief.


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