Who is eligible for student loan relief and how do you apply? (2024)

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The Biden administration announced a sweeping plan to wipe out debt and reform student loan borrowing on Wednesday aimed at benefitting 40 million Americans who owe $1.7 trillion in federal student debt.

Here's what we know about the plan:

Who is eligible?

Those who make under $125,000 as a single person or $250,000 for joint filers are eligible for up to $10,000 in debt forgiveness for their federal loans. For those who received Pell Grants, $20,000 of their debt can be wiped out if they fall under the same salary limits.

It does not matter how much college the borrower attended - forgiveness is offered to everyone from those who dropped out to those who completed graduate school.

Additionally, those who have made payments for 10 years and have loan balances of under $12,000, their debt is forgiven. Previously it took 20 years to have such balances canceled.

How do you apply?

Nearly 8 million people may have their debt canceled automatically because the Education Department already has their income information on file, according to the Federal Student Aid (FSA) website.

The Biden administration plans to launch an application in the coming weeks for borrowers to input their income information. FSA said the application will be available before payments resume on Jan. 1, 2023.

Borrowers can sign up here to be notified when the application is open.

Who is eligible for more relief?

Borrowers who have worked for non-profits, the military, or federal, state, tribal, or local government for 10 years or more could be eligible to have all of their loans wiped out through thePublic Service Loan Forgiveness (PSLF) program.

But changes to the PSLF are time-limited, expiring Oct. 31.

The program forgives the remaining balance on your federal student loans after 120 payments working full-time in public service.

What other changes were made?

The student loan repayment pause was extended one final time until Dec. 31, 2022. The Biden administration also adjusted income-based repayment plans so that borrowers do not have to pay more than 5 percent of their monthly discretionary income on undergraduate loans.

At the same time the federal government is now responsible for unpaid monthly interest so 'no borrower's loan balance will grow as long as they make their monthly payments.'

Borrowers making a monthly payment of $0 due to unemployment or low income will also be covered.

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