The Biden-Harris Administration's Student Debt Relief Plan Explained

President Biden, Vice President Harris, 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. Many borrowers and families may be asking themselves “what do I have to do to claim this relief?” This information is a resource to answer those questions and more.

What Do You Need to Know?

Step 1: Check if you're eligible

You're eligible for student loan debt relief if your annual federal income was below $125,000 (individual or married, filing separately) or $250,000 (married, filing jointly or head of household) in 2021 or 2020.

• $20,000 in debt relief: If you received a Pell Grant in college and meet the income threshold, you'll be eligible for up to $20,000 in debt relief.
• $10,000 in debt relief: If you did not receive a Pell Grant in college and meet the income threshold, you'll be eligible for up to $10,000 in debt relief.

Step 2: Prepare

Here's what you can do to get ready and to make sure you get all updates:

• Log in to your account on StudentAid.gov and make sure your contact information is up to date. StudentAid.gov will send you updates by both email and text message, so make sure to sign up to receive text alerts. If it's been a while since you've logged in, or you can't remember if you have an account username and password (FSA ID), StudentAid.gov offers tips to help you access your account.
• If you don't have a StudentAid.gov account (FSA ID), you should create an account to help you manage your loans.
• Make sure your loan servicer has your most current contact information so they can reach you. If you don't know who your servicer is, you can log in and see your servicer(s) in your account dashboard.

Step 3: Submit your application (when available)

The application will be available online by early October 2022.

StudentAid.gov will share updates on their webpage and send you an email when the application is available. You'll have until Dec. 31, 2023, to submit your application.

Federal Pell Grants Explained

Federal Pell Grants typically are awarded to undergraduate students with low or moderate income.

Most borrowers can log in to StudentAid.gov to see if they received a Pell Grant. StudentAid.gov displays information about the aid you received, including Pell Grants, on your account dashboard and your “My Aid” pages.

When you apply for debt relief, StudentAid.gov will make sure all borrowers who received a Pell Grant receive the full benefit of up to $20,000 in relief if they meet the income requirements. The U.S. Department of Education has data on all borrowers who received a Pell Grant. If you received a Pell Grant prior to 1994, that information won't display in StudentAid.gov, but you'll still receive the full benefit.

Which Loans Are Eligible?

The following types of federal student loans with an outstanding balance as of June 30, 2022, are eligible for relief:

• William D. Ford Federal Direct Loan (Direct Loan) Program loans
  • Subsidized loans
  • Unsubsidized loans
  • Parent PLUS loans
  • Graduate PLUS loans
  • Consolidation loans, as long as all of the underlying loans that were consolidated were first disbursed on or before June 30, 2022
• Federal Family Education Loan (FFEL) Program loans held by the U.S. Department of Education or in default at a guaranty agency
• Federal Perkins Loan Program loans held by the U.S. Department of Education
• Defaulted loans (includes the U.S. Department of Education-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by the U.S. Department of Education)
• More information and Frequently Asked Questions (FAQs) can be found at https://studentaid.gov/debt-relief-announcement/one-time-cancellation or https://studentaid.gov/debt-relief-announcement .

A Fresh Start for Federal Student Loan Borrowers in Default Explained

The U.S. Department of Education (ED) announced it would eliminate the negative effects of default for borrowers with defaulted federal student loans. This will enable approximately 7.5million borrowers with defaulted federal student loans to return to repayment without any past due balance, just like every other borrower. These borrowers are disproportionately likely to be first-generation college students, have received a Federal Pell Grant, and qualify for low monthly payments under affordable income-driven repayment (IDR) plans.

This initiative, called “Fresh Start,” will increase the long-term repayment success of borrowers with defaulted federal student loans, provide substantial benefits to borrowers over the coming months, and last for a period of one year from the end of the payment pause.

Benefits of Fresh Start for Eligible Loans

• Restores access to repayment options—that could offer monthly payments as low as $0 through IDR plans—and provide opportunities for loan forgiveness
• Restores eligibility to receive federal student aid, including Federal Pell Grants and campus-based aid like Federal Work-Study, so borrowers can complete their course of study and increase long-term repayment success
• Protects borrowers from involuntary collection efforts and costly collection fees
• Restores eligibility for future rehabilitation for borrowers who rehabilitated a
  defaulted loan during the payment pause
• Provides credit reporting features—including removing borrowers from the
  federal Credit Alert Verification Reporting System (CAIVRS)—making it
  potentially easier and more affordable for student loan borrowers to afford
  living expenses

Loans Eligible for Fresh Start

• Defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans
• Defaulted Federal Family Education Loan (FFEL) Program loans (both the U.S. Department of Education-held and commercial-held)
• Defaulted the U.S. Department of Education-held Perkins Loans
• Commercial-held FFEL Program loans that defaulted after March 13, 2020, through the duration of the payment pause, will be returned to current standing through the U.S. Department of Education’s action to expand COVID-19 flexibilities. Because these loans will be returned to current standing, they are not eligible for Fresh Start benefits.

Loans Not Eligible for Fresh Start

• Defaulted school-held Perkins Loans
• Defaulted Health Education Assistance Loan Program loans
• Student loans remaining with the U.S. Department of Justice (DOJ)
• Direct Loans and commercial-held FFEL Program loans that default after the end of the pause on student loan payments and collections

Default Resolution Group

• If you’re not sure whether your loans qualify, you can call the Default Resolution Group at 1-800-621-3115.
• More information can be found at https://studentaid.gov/announcements-events/default-fresh-start or https://myeddebt.ed.gov/borrower/#/contactus .

Public Service Loan Forgiveness (PSLF)

If you are employed by a U.S. federal, state, local, or tribal government or not-for-profit organization, you might be eligible for the Public Service Loan Forgiveness Program. The PSLF Program forgives the remaining balance on your Direct Loans after you have made 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

How to Apply for PSLF

Use the PSLF Help Tool for all of the following:

1. Check to see if your employer qualifies.
2. Certify your employment each year.
3. Apply for forgiveness once you’ve met all the requirements.
4. Generate your PSLF form for signing and submitting to the PSLF servicer.

Qualifying for PSLF

To qualify for PSLF, you must

• be employed by a U.S. federal, state, local, or tribal government or not-for-profit organization (federal service includes U.S. military service);
• work full-time for that agency or organization;
• have Direct Loans (or consolidate other federal student loans into a Direct Loan);
• repay your loans under an income-driven repayment plan*; and
• make 120 qualifying payments.

To ensure you’re on the right track, you should submit a Public Service Loan Forgiveness (PSLF) & Temporary Expanded PSLF (TEPSLF) Certification & Application (PSLF Form) annually or when you change employers. StudentAid.gov will use the information you provide on the form to let you know if you are making qualifying PSLF payments. This will help you determine if you’re on the right track as early as possible.

Suspended Payments Count Toward PSLF and TEPSLF During the COVID-19 Administrative Forbearance

If you have a Direct Loan and work full-time for a qualifying employer during the payment suspension (administrative forbearance), then you will receive credit toward PSLF or TEPSLF for the period of suspension as though you made on-time monthly payments in the correct amount while on a qualifying repayment plan.

To see these qualifying payments reflected in your account, you must submit a PSLF form certifying your employment for the same period of time as the suspension. Your count of qualifying payments toward PSLF is officially updated only when you update your employment certifications.

Note: In-grace, in-school, and certain deferment, forbearance, and bankruptcy statuses are not eligible for credit toward PSLF.

Qualifying Employer

Qualifying employment for the PSLF Program isn’t about the specific job that you do for your employer. Instead, it’s about who your employer is. Employment with the following types of organizations qualifies for PSLF:

• Government organizations at any level (U.S. federal, state, local, or tribal) – this includes the U.S. military
• Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code

Serving as a full-time AmeriCorps or Peace Corps volunteer also counts as qualifying employment for the PSLF Program. Use StudentAid.gov employer search tool to help determine if your employer qualifies for PSLF.

The following types of employers don't qualify for PSLF:

• Labor unions
• Partisan political organizations
• For-profit organizations, including for-profit government contractors

Contractors: You must be directly employed by a qualifying employer for your employment to count toward PSLF. If you’re employed by an organization that is doing work under a contract with a qualifying employer, it is your employer’s status—not the status of the organization that your employer has a contract with—that determines whether your employment qualifies for PSLF. For example, if you’re employed by a for-profit contractor that is doing work for a qualifying employer, your employment does not count toward PSLF.

Other types of not-for-profit organizations: If you work for a not-for-profit organization that is not tax-exempt under Section 501(c)(3) of the Internal Revenue Code, it can still be considered a qualifying employer if it provides certain types of qualifying public services.

Full-time Employment

For PSLF, you’re generally considered to work full-time if you meet your employer’s definition of full-time or work at least 30 hours per week, whichever is greater.

If you are employed in more than one qualifying part-time job at the same time, you will be considered full-time if you work a combined average of at least 30 hours per week with your employers.

If you are employed by a not-for-profit organization, time spent on religious instruction, worship services, or any form of proselytizing as a part of your job responsibilities may be counted toward meeting the full-time employment requirement.

Eligible Loans

Any loan received under the William D. Ford Federal Direct Loan (Direct Loan) Program qualifies for PSLF. Loans from these federal student loan programs don't qualify for PSLF: the Federal Family Education Loan (FFEL) Program and the Federal Perkins Loan (Perkins Loan) Program. However, they may become eligible if you consolidate them into a Direct Consolidation Loan.

Student loans from private lenders do not qualify for PSLF.

Under normal PSLF Program rules, if you consolidate your loans, only qualifying payments that you make on the new Direct Consolidation Loan can be counted toward the 120 payments required for PSLF. Any payments you made on the loans before you consolidated them don’t count. However, if you consolidate these loans into a Direct Loan before October 31, 2022, you may be able to receive qualifying credit for payments made on those loans through the limited PSLF waiver.

Qualifying Payments

A qualifying monthly payment is a payment that you make

• after Oct. 1, 2007;
• under a qualifying repayment plan;
• for the full amount due as shown on your bill;
• no later than 15 days after your due date; and
• while you are employed full-time by a qualifying employer.

You can make qualifying monthly payments only during periods when you’re required to make a payment. Therefore, you can’t make a qualifying monthly payment while your loans are in

• an in-school status,
• the grace period,
• a deferment, or
• a forbearance.

If you want to make qualifying payments, but you’re in a deferment or forbearance, contact your federal student loan servicer to waive the deferment or forbearance. However, you can still receive credit toward PSLF during the COVID-19 national emergency administrative forbearance period, which extends from March 13, 2020 through August 31, 2022.

Your 120 qualifying monthly payments don’t need to be consecutive. For example, if you have a period of employment with a non-qualifying employer, you will not lose credit for prior qualifying payments you made.

The best way to ensure that you are making on-time, complete payments is to sign up for automatic debit with your loan servicer.

Qualifying Repayment Plans

Qualifying repayment plans include all of the income-driven repayment (IDR) plans (plans that base your monthly payment on your income).

While payments made under the 10-year Standard Repayment Plan are qualifying payments, you would have to change to an IDR plan to benefit from PSLF. Under the 10-year Standard Repayment Plan, generally your loans will be paid in full once you have made the 120 qualifying PSLF payments and there will be no balance to forgive. Before you change to an IDR plan, however, you should understand that your payment may increase under these plans depending on your income and the amount that you owe. If this is the case for you, and you do not wish to pay this higher amount, then the PSLF Program may not benefit you.

The qualifying repayment plan rules have been temporarily suspended as a result of the limited PSLF waiver. You may receive credit toward PSLF, provided you had qualifying employment, if you made payments on any type of non-consolidation Direct Loan on any repayment plan prior to October 6, 2021. These loan types include:

• Direct Subsidized Loans
• Direct Unsubsidized Loans, and
• Graduate PLUS Loans made to students.

For consolidation loans, borrowers may get credit for payments made on the underlying loans after October 1, 2007.

The following repayment plans do not qualify for PSLF:

• Standard Repayment Plan for Direct Consolidation Loans
• Graduated Repayment Plan
• Extended Repayment Plan
• Alternative Repayment Plan

Contact for PSLF Questions

• If you have any additional questions, contact MOHELA at 1-855-265-4038.
• More information on the Public Service Loan Forgiveness (PSLF) Program and Frequently Asked Questions (FAQs) can be found at https://studentaid.gov/manage-loans/forgiveness-cancellation/public-service .