What the new student loan relief measures mean for you

By Kaitlyn Dunphy, Esq.


Dec. 6, 2022

The student loan forgiveness program is currently on hold until the U.S. Supreme Court hears a challenge to the program. The court is scheduled to hear arguments in February 2023. 

Due to the litigation, new applications are not being accepted by the Federal Student Aid website at this time; already submitted applications will be held. 

The student loan repayment pause, originally set to expire at the end of the year, has been extended to June 30, 2023, for federal student loans.

On Aug. 24, the Biden-Harris administration announced a new program for student loan debt relief. That program will automatically forgive up to $10,000 of student loan debt for eligible borrowers, and up to $20,000 of debt for recipients of Pell Grants. 

Who qualifies for student loan forgiveness? 

Borrowers who had an income of $125,000 or less, for those who filed tax returns as individuals, or who had a household income of $250,000 or less for either their 2020 or 2021 tax year will be eligible for this loan forgiveness program. This program applies to nearly all government-held federal student loans, most undergraduate and graduate Direct Loans, Parent PLUS and Grad PLUS, Federal Family Education Loans (FFEL) held by the Department of Education (ED), Perkins Loans held by ED, Consolidation Loans (disbursed on or before June 30, 2022), and defaulted loans (whether ED-held or commercially serviced subsidized, unsubsidized, parent PLUS, grad PLUS, and Perkins loans held by ED).  

While FFEL loans held by private lenders do not automatically qualify, those loans can be consolidated into Direct Loans, which do qualify. ED is working toward expanding eligibility to privately-held FFEL loans without the need for consolidation. 

How do I apply for student loan forgiveness? 

Approximately 8 million borrowers qualify for automatic relief. In the event that your loans are automatically forgiven, you will receive notification through the contact information you provided on StudentAid.gov and receive notice from the loan servicer when forgiveness is applied. Those with loans should review that their contact information is current on both StudentAid.gov and with their loan servicer. 

Because there is no way to know if you qualify for automatic forgiveness unless you have received notice, we encourage you to submit the ED online application when it becomes available. The application is currently expected to go live in early October 2022. You can subscribe to receive a notification when the app launches by signing up at ed.gov/subscriptions

When should I expect to receive student loan relief? 

If not received automatically, ED is estimating that loan forgiveness will be applied four to six weeks after the submission of a completed application. Borrowers who want relief to be applied prior to the unpausing of student loan payments in January of 2023 should submit their application by Nov. 15, 2022. Otherwise, the application process is anticipated to be open for one year. 

Does it cost anything to apply? 

No. There is no fee associated with filing this application. Be on alert for scam calls or emails asking for personal, confidential information claiming that you need to act now in order to receive loan forgiveness. If you are unsure about whether a communication you receive is legitimate, or want to report a potential scam, visit studentaid.gov/articles/avoid-student-loan-forgiveness-scams for more information. 

What happens if I have a remaining balance after loan forgiveness? 

Borrowers with a remaining balance after receiving student loan forgiveness who are repaying their loans under a standard, extended or graduated repayment plan will have their loan repayments recalculated. The re-amortization will potentially reduce your monthly payment. Your loan servicer will communicate any changes in your repayment plan. 

Is there other student loan relief available if I don’t qualify for loan forgiveness? 

Yes, there are several other measures being taken as part of the student loan relief package. First, the student loan pause that was first put into effect on March 20, 2020, as part of COVID-19 emergency relief has been extended through Dec. 31, 2022. This will be the last extension of this forbearance measure. Loan payments and accrual of interest will resume on Jan. 1, 2023. 

Second, there are proposed changes to income-based repayment plans. Instead of borrowers on income-based repayment plans paying no more than 10% of their discretionary income, they would pay no more than 5% of their discretionary income on repayment of student loans.  

There would also be changes to the calculation of nondiscretionary income under the proposed regulations. No borrower earning under 225% of the federal poverty level—about the annual equivalent of a $15 minimum wage—would have to make a monthly payment. Loan balances of $12,000 or less would be forgiven after 10 years of payments, instead of 20. Additionally, if monthly payments are made, the loan balance would not grow because of interest rates. 

Lastly, temporary changes to the Public Service Loan Forgiveness program are expanding eligibility of payments and loans that qualify for that program. To take advantage of this limited-time waiver, applications must be filed by Oct. 31, 2022. 

Where can I get further information and assistance? 

For more information about the student debt relief plan, visit StudentAid.gov, or attend one of NJEA’S monthly “Degrees Not Debt” webinars by registering at njea.org/dndwebinars. Additionally, NEA offers the Student Debt Navigator powered by Savi, reachable at 833-615-1376 or neamb.com/savi.