Breaking Down the Massive Student Biden Loan Forgiveness Plan

The Biden Loan Forgiveness crisis in America has been building for decades, with total student loan debt now topping $1.7 trillion. This enormous debt burden is preventing millions of Americans from buying homes, starting businesses, and even starting families. 

During his presidential campaign, Joe Biden made tackling the student debt crisis one of his key promises. He pledged to provide student debt cancellation of a minimum of $10,000 per person. This August, Biden announced his administration would follow through on that promise by canceling up to $10,000 in federal student loan debt for borrowers earning under $125,000 per year. The announcement provides long-awaited relief to millions who have struggled under the burden of student loans.

The broad student loan forgiveness program will cancel up to $10,000 in federal student loan debt for individuals making under $125,000 per year or married couples making under $250,000. Pell grant recipients can receive up to $20,000 in debt cancellation. 

Overall, Biden’s loan forgiveness program aims to alleviate the student debt crisis and provide financial relief and freedom to millions of Americans. However, questions remain about the long-term impacts and whether it goes far enough. This article will provide an in-depth look at Biden’s federal student loan forgiveness program.

Eligibility Requirements

The Biden student loan forgiveness program has specific eligibility requirements in order to qualify for up to $10,000 in federal student loan forgiveness. Here are the key criteria to be eligible:

  • The borrower must have federal direct student loans that are not in default. This includes loans made under the William D. Ford Federal Direct Loan Program or Federal Family Education Loan (FFEL) Program. Federal Perkins Loans, private student loans, and federal student loans in default are not eligible.
  • The borrower must have an annual federal adjusted gross income (AGI) for 2020 or 2021 of under:
  • $125,000 for individuals
  • $250,000 for married couples or heads of households
  • Those who are dependent students will be subject to the income caps based on their parent’s income.
  • Both undergraduate and graduate direct federal student loans are eligible. 
  • The $10,000 in debt relief applies to each individual borrower, not each loan. For example, one borrower with both undergraduate and graduate direct federal loans totaling $45,000 would be eligible for $10,000 in relief.
  • Relief is limited to the outstanding principal balance, meaning the amount forgiven will not exceed the current amount still owed on the loan. Any accrued interest is not included in the forgiveness amount.
  • Borrowers who received Pell Grants while enrolled in college are eligible for up to $20,000 in forgiveness. 
  • The borrower must be a current holder of an eligible federal student loan. Borrowers who fully paid off loans prior to the announcement are not retroactively eligible.

Amount of Forgiveness

The Biden administration’s student loan forgiveness plan will provide up to $10,000 in debt cancellation for individual borrowers who earn less than $125,000 per year, and up to $20,000 in debt cancellation for Pell Grant recipients who meet the income requirement. This applies to both undergraduate and graduate loans.

The amount of forgiveness is determined on a per-borrower basis, not per loan. So if an individual borrowed $30,000 to finance their bachelor’s degree and borrowed another $50,000 to complete their master’s degree, they would be eligible for up to $20,000 in forgiveness if they had ever received a Pell Grant. Their total outstanding debt would be reduced from $80,000 to $60,000.

For borrowers who did not receive Pell Grants as undergraduates, the maximum forgiveness amount is $10,000. Using the same example above, their total debt would be reduced from $80,000 to $70,000. 

The income cap of $125,000 applies based on either 2020 or 2021 adjusted gross income. The amount phase-out begins for individuals earning over $125,000, completely phasing out for those earning $250,000 or more. So high-income earners may receive partial loan forgiveness, while those earning a quarter million or more per year will not see any forgiveness.

The debt cancellation is a one-time policy action that will be applied automatically for qualifying federal loan borrowers. It does not apply to future students or future loans. The Department of Education will provide further guidance on how borrowers can check their eligibility status and apply if they do not receive automatic forgiveness.

How to Apply

The application process for Biden’s student loan forgiveness program is fairly straightforward for most borrowers. The relief will be automatic for nearly 8 million borrowers who have income data already on file with the Department of Education. These borrowers do not need to take any action to receive their forgiveness.

For others, an application form will be made available by early October 2022. The application will be simple and user-friendly. Borrowers will need to provide their name, social security number, date of birth, contact information, and consent to share income data with the Education Department. The application is estimated to take 5-10 minutes to complete. 

Once submitted, the Biden administration expects to process applications and begin granting relief within 4-6 weeks. So borrowers who complete their application by mid-November 2022 can expect to see their balances decrease before the student loan payment pause expires on December 31, 2022.

Overall, the process is designed to be simple and accessible to borrowers. The application will be available on both computers and mobile devices, so borrowers can complete it from anywhere. Unless further action is announced, borrowers need to submit the application only once to receive their full amount of approved forgiveness.

Expected Impact

The Biden administration’s student loan forgiveness plan is expected to provide relief to millions of borrowers across the country. According to estimates from the Department of Education, over 40 million Americans are eligible for some amount of student debt cancellation under this initiative. 

The total cost of the program is projected to be around $300 billion to $320 billion over the next 10 years. This factors in both the initial forgiveness as well as future impacts on income-driven repayment plans.

Specifically, the Department of Education estimates that approximately 8 million borrowers may qualify to have their loans completely canceled based on the income criteria. About 27 million borrowers are expected to receive up to $10,000 in forgiveness if they earned less than $125,000 (or $250,000 for married couples) in either 2020 or 2021. An additional nearly 5 million borrowers would be eligible for $10,000 in forgiveness if they received a federal Pell Grant while enrolled in college. 

In total, the Biden administration expects around 20 million borrowers will have their remaining federal student loan balances completely erased under this initiative. This student debt relief is projected to help a broad range of Americans make ends meet and provide greater financial security.


President Biden’s plan for student loan forgiveness has elicited a range of reactions from borrowers, politicians, and advocacy groups.

Reactions from Borrowers

Many student loan borrowers have expressed relief and gratitude for the loan forgiveness plan. On social media and online forums, borrowers say the relief will allow them to start saving, purchase homes, have children, and feel less stressed about their financial situations. 

However, some borrowers argue the forgiveness does not go far enough. Borrowers with privately held FFEL loans not eligible for forgiveness say they feel left out. Others with graduate degrees and higher debt loads hoped their full balances would be forgiven. Some have called for widespread cancellation of all federal student loan debt.

Reactions from Politicians 

Democratic politicians have widely praised Biden’s plan as a positive step in addressing the $1.7 trillion student debt crisis. Progressive Democrats like Senator Elizabeth Warren and Representative Ayanna Pressley argue the plan does not go far enough but say it will provide urgent relief for millions. 

Republican politicians have largely criticized the plan, calling it an unfair handout and government overreach. Republican Leader Mitch McConnell said the plan is “wildly unfair” to lower-income Americans who did not attend college. Republicans have threatened legal challenges to the policy.

Reactions from Advocacy Groups

Groups like the NAACP and Student Borrower Protection Center have applauded the forgiveness, saying it will help close racial wealth gaps and give borrowers better financial futures. However, they emphasize broader reform is still needed.

Conservative groups like the Heritage Foundation have condemned the plan as unconstitutional and irresponsible. Some fiscal responsibility groups have raised concerns about the plan’s inflationary impact.


The student loan forgiveness plan has faced criticism on several fronts.

Concerns about cost

  • The total cost of broad student loan forgiveness would be very high, with estimates ranging from $300 billion to over $1 trillion depending on the specifics of the plan. This large price tag has raised concerns about the impact on the federal budget deficit.
  • Critics argue that forgiving debt for those who chose to take out student loans is unfair to taxpayers, including those who never attended college or already paid off their loans. They contend it forces working Americans who did not attend college to pay for those who did.

Concerns about fairness 

  • Across-the-board forgiveness would benefit high-income earners the most since they tend to have larger loan balances. Forgiving loans for high-earning graduates is seen as regressive by critics.
  • Blanket forgiveness would treat all borrowers equally, regardless of financial need or effort to pay off loans. Some view this as unfair compared to income-based repayment plans.

Concern about incentives

  • Broad forgiveness could incentivize colleges to raise tuitions further, expect future bailouts, and remove accountability.
  • Forgiveness could disincentivize personal responsibility, smart borrowing, and timely repayment of loans.

Future of Loan Forgiveness 

President Biden Loan Forgiveness plan has provided relief to millions of borrowers, but many are wondering if there will be additional forgiveness in the future. 

During his presidential campaign, Biden supported legislation to cancel up to $10,000 in student debt per borrower. After taking office, he expressed support for canceling $10,000 in federal student loan debt via executive action, though maintained that Congress should pass a bill forgiving more.

Biden’s one-time loan forgiveness program this year provided up to $20,000 in debt cancellation for Pell Grant recipients, and up to $10,000 for other federal student loan borrowers meeting income requirements. While welcomed by many, this fell short of the larger forgiveness amounts that Biden previously supported. 

Going forward, the president plans to continue fighting for expanded loan forgiveness through legislation. However, with Republicans taking control of the House in 2023, the chances of Congress passing a sweeping forgiveness bill are very low. 

Biden has not ruled out additional executive action on loan forgiveness but has indicated that his legal authority to do so is limited. His administration maintains that the one-time debt relief program went as far as legally possible under existing law.

Unless Democrats can expand their Congressional majorities in 2024 and pass loan forgiveness legislation, it appears unlikely that Biden will pursue further wide-scale federal student debt cancellation during his first term as president.

Advocates for borrowers will continue pressuring the administration to lower student debt burdens through existing programs like income-driven repayment plans. But Biden’s vision for broad loan forgiveness may depend on the outcome of the 2024 elections and shifting political dynamics.


Other proposals for student debt reform have been floated as alternatives to Biden’s broad loan forgiveness plan. Some argue a more targeted approach would be better, such as:

  • Capping student loan interest rates. Some propose capping rates for all federal student loans at a lower level, such as Biden’s original proposal of 5% interest for undergraduate loans. This would prevent balances from ballooning.
  • Expanding or simplifying existing forgiveness programs. Ideas include expanding Public Service Loan Forgiveness, lowering the requirements for income-driven repayment forgiveness, or automating forgiveness for special cases like permanent disability.
  • Forgiveness is based on income. Rather than forgiving a flat amount for all, some want limits based on income level. Those above a certain threshold wouldn’t qualify.
  • Forgiveness after a set period of payments. For example, forgive loans after 10-15 years of regular payments, regardless of the remaining balance.
  • Forgiveness is based on degree completion. Target forgiveness as an incentive to complete a degree, which leads to higher incomes. 
  • Forgiveness in bankruptcy. Allow discharging student loans in bankruptcy to offer relief in cases of financial ruin.

Proponents argue these alternatives could provide more affordable and equitable relief if better targeted at those in need. But they lack the simplicity and breadth of Biden’s blanket forgiveness. The debate continues over the best way to reform the system for current and future students.


President Biden’s federal student loan forgiveness program is one of the most significant actions to address the $1.7 trillion student debt crisis in the United States. Under this program, up to $10,000 in federal student loan debt will be forgiven for individual borrowers making under $125,000 per year, and up to $20,000 in debt forgiveness for Pell Grant recipients. 

This broad-based debt relief will provide financial breathing room for millions of student loan borrowers struggling with ballooning monthly payments. With nearly one-third of borrowers owing less than $10,000 in federal student loans, this program will completely wipe away their debt burden. Even partial relief of a few thousand dollars can make a meaningful difference in borrowers’ finances.

On a macro level, wide-scale student debt forgiveness is expected to provide a boost to the economy. With less money tied up in loan payments every month, borrowers will have more discretionary income to spend on housing, transportation, food, entertainment, and other sectors. This increased consumer spending and demand could energize economic growth, while also allowing borrowers to save, invest and plan financially for the future. 

For a country facing rising inflation, high costs of living, and economic uncertainty, this program is a lifeline for middle and working-class borrowers drowning in student debt. By removing this financial obstacle for millions of Americans, the broader hope is that it will spur greater economic security and mobility for individuals, and in turn, society as a whole.

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