Biden’s Bold Student Loan Forgiveness Plan: Who Benefits Most?

Biden Loan Forgiveness Student loan debt has become a crisis in the United States. Over 43 million Americans hold a collective $1.6 trillion in federal student loan debt. The average monthly payment is between $200 to $299 per month and many borrowers struggle to keep up with payments. 

In August 2022, President Biden announced a plan to provide targeted student debt relief to address this growing crisis. The plan will provide up to $10,000 in loan forgiveness for borrowers making less than $125,000 a year, or $20,000 for Pell Grant recipients. It is one of the most significant moves by the administration to lessen the burden of student loan debt on American borrowers.

The loan forgiveness applies to federal student loans used for undergraduate and graduate education. It aims to provide breathing room for middle and low-income borrowers who are struggling with repayment. While it does not solve the student debt crisis entirely, it is intended to help stimulate the economy and provide financial relief for millions of Americans.

Who Qualifies

The Biden student loan forgiveness program has specific eligibility requirements in terms of the types of federal loans it covers and income thresholds. 

To qualify, borrowers must have federal direct loans or federally managed FFEL loans held by ED. This includes:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans 
  • Direct PLUS Loans
  • Direct Consolidation Loans
  • FFEL Program loans held by ED
  • Federal Perkins Loans held by ED

The following loans do not qualify:

  • FFEL Program loans not held by ED
  • Federal Perkins Loans not held by ED
  • Private student loans
  • Institutional loans 

In addition to having eligible federal loans, borrowers must meet income requirements based on their 2020 or 2021 tax year:

  • Individuals earning under $125,000 per year qualify for up to $10,000 in forgiveness.
  • Married couples or heads of households earning under $250,000 per year qualify for up to $10,000 in forgiveness per partner, for a combined total of up to $20,000.

Borrowers who received a Pell Grant while enrolled in college are eligible for up to $20,000 in forgiveness. The income thresholds remain the same.

Eligibility is based on adjusted gross income, so income from all sources before deductions is included. The program does not specify citizenship requirements, so DACA recipients and international students may potentially qualify if they meet the loan and income criteria.

How Much Forgiveness

The Biden student loan forgiveness plan offers different amounts of forgiveness based on whether the borrower has undergraduate or graduate loans. 

For borrowers with undergraduate loans, up to $10,000 can be forgiven. This applies to loans used to pay for an undergraduate degree, regardless of whether they are federal Direct Loans or loans part of the now-discontinued Federal Family Education Loan (FFEL) Program. Both subsidized and unsubsidized Direct Loans qualify. 

Borrowers who received Pell Grants while enrolled in college are eligible for up to $20,000 in forgiveness. Pell Grants are awarded based on financial need, so this provision targets more relief at low-income borrowers.  

For borrowers with graduate loans, up to $10,000 can be forgiven. This includes loans taken out to pay for graduate or professional degrees. There is no extra benefit for Pell Grant recipients when it comes to graduate debt.

The $10,000 or $20,000 caps apply to the total amount forgiven per borrower, not per loan. Whether someone has multiple undergraduate or graduate loans, the total forgiveness will not exceed the limits. Parent PLUS loans taken out under the borrower’s name are also eligible for forgiveness.

How to Apply

The application process for student loan forgiveness under Biden’s plan is simple. The Department of Education will launch a short online application by early October 2022. Borrowers can complete and apply through the [Federal Student Aid website]( 

The application will require borrowers to provide their name, social security number, date of birth, contact information, and details on the loans they want forgiven. Borrowers do not need to upload any supporting documents or prove financial hardship. The application is estimated to take 5-10 minutes to complete. 

Once submitted, the Department of Education will review the application and determine the borrower’s eligibility. The borrower needs no further action after applying.

The application will remain open until December 31, 2023. All applications must be submitted by this date to qualify for loan forgiveness under this program. 

Borrowers are encouraged to apply as soon as the form is available in October 2022. Those who apply within the first few weeks can expect to receive loan forgiveness before the Department of Education’s initial goal of completing discharges by January 2023. 

Applying does not guarantee approval for forgiveness. The Department of Education will continue processing applications and forgiving eligible loans throughout 2023. Borrowers should continue paying their loans until they receive confirmation that their debt has been discharged.

Payment Pause Extension 

One of the key parts of Biden Loan Forgiveness plan is the extension of the payment pause on federal student loans through December 31, 2022. The payment pause was originally set to expire on May 1, 2022, after being in effect since March 2020 due to the COVID-19 pandemic. 

The Biden administration recognized that borrowers were still struggling financially from the impacts of the pandemic and rising inflation. By extending the payment pause, Biden aimed to provide continued relief to federal student loan borrowers. 

Under the extension, borrowers will not be required to make payments on federal student loans until after December 31, 2022. Interest rates are set to 0% as well during this period. Borrowers will also not accumulate interest on their loans. 

The payment pause extension gives federal student loan borrowers additional time to financially recover before restarting their loan payments. Biden administration officials stated the extension will allow borrowers to achieve greater financial security as they recover from the pandemic.

Interest Forgiveness 

Under the Biden Administration’s new student loan debt relief plan, interest capitalization will be limited for borrowers who are repaying their loans. 

Interest capitalization occurs when unpaid interest gets added to the principal balance of a loan. This causes the loan balance to grow over time. Under the new initiative, interest capitalization will be capped at once for borrowers repaying their loans. This means unpaid interest will not continue compounding indefinitely for these borrowers.

Additionally, the Biden plan provides for automatic forgiveness of any interest that accrued but was unpaid during the payment pause on federal student loans over the past 2.5 years. This means that when the payment pause ends and repayment restarts, borrowers’ loan balances will be the same as they were in March 2020 when the pause first began. No interest will have accrued during that time. 

This interest forgiveness will provide financial relief for millions of borrowers. Had the unpaid interest over the past 2.5 years been allowed to capitalize, many borrowers would have seen their loan balances balloon. Forgiving this interest will help struggling borrowers avoid even higher debt loads when repayment commences.

Overall, limiting interest capitalization going forward and forgiving past unpaid interest will offer borrowers more manageable student loan balances. This lessens the burden of debt and could help many borrowers pay off their loans faster. The interest provisions are an important component of Biden’s broader student debt relief initiative.

Impact on Borrowers

President Biden Loan Forgiveness plan aims to provide financial relief for millions of borrowers across the country. For those who qualify, this debt cancellation will have a significant impact on their personal finances and plans.

Financial impact on borrowers

Student loan debt is a major financial burden for many Americans. The average student loan balance is around $30,000. For borrowers with larger debt loads, monthly payments can be hundreds of dollars per month. Biden’s plan will wipe away either $10,000 or $20,000 in student loan debt per borrower. This will lower monthly payments, allowing borrowers to dedicate more of their paychecks toward other expenses and savings goals.

Relieving student debt will be particularly impactful for lower-income borrowers. An analysis by the University of Pennsylvania found Biden’s forgiveness plan would eliminate the remaining student debt for nearly 1/3 of borrowers. This debt relief can help lessen the strain for those struggling the most with repayment.

Overall, broad student loan forgiveness will positively impact household finances and provide an extra boost to consumer spending power. Borrowers will have more disposable income, which can stimulate the broader economy.

Plans for Debt Relief

With reduced student loan burdens, borrowers may feel greater freedom to reach major life goals. Saving for a down payment, buying a home, getting married, or starting a family are all expensive endeavors that are more feasible without the monthly burden of student loans. 

Young borrowers may also feel more empowered to take career risks, pursue advanced degrees, or start small businesses. Entrepreneurship and job mobility could increase as a result.

Additionally, borrowers hoping to retire shortly will benefit. Those nearing retirement age often still have student debt balances. Biden’s forgiveness plan will help provide financial stability for older borrowers transitioning out of the workforce.

Overall, broad student loan forgiveness will give borrowers more flexibility to live their lives and make financial decisions unencumbered by debt burdens from their schooling. This has far-reaching impacts on career trajectories, major purchases, retirement timelines, and more.


While student Biden Loan Forgiveness has been widely celebrated by many borrowers, it has also faced criticism from some corners. 

  • Arguments against broad forgiveness – Some have argued that Biden’s broad forgiveness plan unfairly benefits high-income earners who are capable of paying off their loans. Critics note that people with graduate degrees tend to have higher debt totals as well as earning potential. Forgiving loans for all borrowers under $125,000, regardless of degree or field of study, has been characterized as a regressive policy that disproportionately helps the wealthy.
  • Calls for more targeted relief – Other opponents believe student loan forgiveness should be more narrowly targeted to those in financial need. Across-the-board cancellation, they argue, provides aid to too many borrowers who are financially stable enough to pay back their loans. These critics contend that forgiveness should be restricted based on income level or degree type, rather than the blanket approach of Biden’s plan. They point out that even $10,000 or $20,000 of relief would be a windfall for many borrowers with the means to repay.

Rather than mass cancellation, critics argue that reforms should focus on income-driven repayment plans, public service loan forgiveness, or discharge in bankruptcy. A more targeted approach based on financial hardship or field of study, they say, would direct finite aid dollars to those who truly need relief. While popular politically, broad student loan forgiveness has faced valid questions regarding its fairness, cost, and economic impact.

Future Reforms

President Biden and Congressional Democrats have proposed additional reforms to make college more affordable beyond one-time debt cancellation. These proposals aim to lower the cost of college for future students and reduce the need for borrowing.

Some of the reforms proposed include:

  • Making community college free. President Biden supports making two years of community college free, as proposed in legislation like the America’s College Promise Act. This would remove tuition costs for many students seeking associate’s degrees or vocational certifications.
  • Doubling the maximum Pell Grant award. The Pell Grant helps lower-income students pay for college, but has not kept up with rising tuition costs. Democrats support increasing the maximum award to improve affordability.
  • Expanding income-driven repayment plans. Plans like REPAYE cap monthly student loan payments at a percentage of the borrower’s discretionary income. Proposals would expand eligibility and lower the percentage cap to reduce burdens.
  • Reform public service loan forgiveness. The current PSLF program provides forgiveness to borrowers working in public service after 10 years of payments. Democrats want to fix issues and expand eligibility to improve access.
  • Make state college free for families earning under $125,000. Some Democratic proposals aim to make four-year public colleges tuition-free for lower and middle-class families.
  • Crack down on predatory for-profit colleges. Democrats support stronger regulations and oversight of for-profit colleges accused of misleading students and pushing unaffordable loans.
  • Invest more in colleges serving minority students. Proposals call for increased federal funding and grants for historically Black colleges & universities and other minority-serving institutions.

These reform proposals aim to address the root causes of rising student debt and make higher education more accessible and affordable in the long run. While one-time debt cancellation provides relief for current borrowers, further reforms could prevent the burden of student loans from growing for future generations.


The Biden administration’s student Biden Loan Forgiveness plan aims to provide relief to millions of borrowers struggling with student debt. By forgiving up to $10,000 in federal student loans for individuals earning under $125,000 a year, and up to $20,000 for Pell Grant recipients, the administration hopes to ease the burden for many borrowers. 

This forgiveness plan, along with the extended payment pause until the end of 2022, offers borrowers breathing room as loan payments are set to resume in 2023. With skyrocketing higher education costs over the past decades, student loan debt has impacted millions of Americans and weighed down the economy. Proponents argue this plan is a step in the right direction to make college more affordable and provide financial stability to working families.

However, critics say the plan does not go far enough. They argue comprehensive reform is needed to fix the underlying issues that caused the student debt crisis. Without systemic changes, experts warn that student debt will continue ballooning. While not a complete solution, Biden’s loan forgiveness program aims to provide immediate relief to those struggling most with student loans. It also signals that policymakers are taking the issue seriously and recognize the challenges student debt poses.

The path forward will likely require a multifaceted approach, including continued loan forgiveness programs, college affordability legislation, and consumer protections for borrowers. As policymakers debate long-term solutions, Biden’s plan marks an unprecedented move to ease the burden of student debt and signals a shift toward addressing this complex problem.

Leave a Comment