Student Debt Relief Plan – explained


Sept. 7, 2022

If you or a loved one carries student loan debt, you may be eligible to benefit from the Student Debt Relief Plan recently announced by the current presidential administration.

Highlights of the plan:

  • Extends the current pause on student loan repayment through Dec. 31, 2022, with payments resuming in January 2023. This is the final pause extension and will occur automatically for borrowers.
  • 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 adjusted gross income is less than $125,000 for individuals or $250,000 for households.
  • Borrowers who are employed by non-profits, the military, or federal, state, Tribal, or local government may be eligible to have all of their student loans forgiven through the temporary changes to the Public Service Loan Forgiveness (PSLF) program. Time-limited changes to the PSLF program provide an easier path to forgiveness of outstanding debt for these borrowers even if they had been previously told that they weren’t eligible.

Student Debt Relief Plan: An overview

The table below outlines the key plan provisions, who is eligible to benefit and what actions they will need to take to apply for relief.

Who can benefit? Plan provision Action to take/deadline

Student loan borrowers with individual income less than $125,000 or $250,000 for households and have student loans held by the U.S. Department of Education.

Loans must have been taken out before July 2022 to be eligible for cancellation.

Eligible for up to $10,000 in debt cancellation.

Check if the U.S. Department of Education has your income data.

If the Department has your income data, you may be eligible to receive relief automatically.

If it doesn’t, you will need to fill out an application (which has not yet been released) before Dec. 31, 2023.

More information is expected to be released by the federal government in the coming weeks. You can subscribe to receive updates directly from the U.S. Department of Education. Subscribe here.

Pell Grant recipients with student loans held by the U.S. Department of Education who have individual income less than $125,000 or $250,000 for households.

Loans must have been taken out before July 2022 to be eligible for cancellation.

Eligible for up to a total of $20,000 in debt cancellation. (Not in addition to the $10,000 mentioned above.)

See instructions above.
Student loan borrowers employed by non-profits, the military, or federal, state, Tribal, or local government and have student loans held by the U.S. Department of Education.

May be eligible to have all their student loans forgiven due to time-limited changes that waive certain eligibility criteria in the Public Service Loan Forgiveness (PSLF) program.

Eligible borrowers need to apply for PSLF before these temporary changes expire on Oct. 31, 2022. Apply here.

Enrollments on or after Nov. 1, 2022, will not be eligible to benefit from these changes.

All current student loan borrowers with debt held by the U.S. Department of Education.

Will be required to begin repaying their federal loans beginning in January 2023. The pandemic-era repayment pause on all federally held loans will end Dec. 31, 2022.

No action is needed by you to extend your student loan pause through the end of the year.

If you haven’t already, prepare to begin repayment of your loans starting in January 2023. For detailed repayment plan information and to calculate your estimated repayment amount under each of the different plans, you can use the loan simulator from the U.S. Department of Education. Contact your loan servicer to discuss repayment plan options. Log in to your loan service center to set up repayment.

All current and future student loan borrowers who may be eligible to enroll in an income-based repayment plan.

(Typically, this plan is reserved for borrowers whose outstanding federal student loan debt represents a significant portion of their annual income.)

May be eligible to participate in a new income-based repayment plan that:

  • Requires borrowers to pay no more than 5% of their discretionary income monthly on undergraduate loans. (Previously, borrowers were required to pay 10%.)
  • Release borrowers of their obligation to pay interest on student loans as long as they make the plan’s minimum monthly payments.
  • Will forgive loan balances after 10 years of payments (previously, it was 20 years), for borrowers with loan balances of $12,000 or less.
  • Raises the amount of income that is considered non-discretionary income and therefore is protected from repayment, guaranteeing that no borrower earning under 225% of the federal poverty level — about the annual equivalent of a $15 minimum wage for a single borrower — will have to make a monthly payment.
Details are still unknown. To apply for an income-based repayment plan, reapply or for any updates, go to the U.S. Department of Education website.

 For more information on the Student Debt Relief Plan, see the official factsheet from the White House.

How will the Student Debt Relief Plan impact your financial goals?

If you or a loved one is impacted by the Student Debt Relief Plan, let’s talk about how it may affect your financial plan. At a minimum, student loan relief may mean extra savings in your monthly budget — and we can share guidance on how to redirect these funds to reach your other financial goals.