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Student Loans – One-Time Debt Reduction

This blog was updated 10/18/2022 to include the application link. 

On Aug. 24, 2022, the Biden-Harris Administration announced the One-Time Student Loan Debt Relief plan that includes one-time student loan debt relief targeted to low- and middle-income families.

The U.S. Department of Education (ED) will provide up to $20,000 in debt relief to people who received a Federal Pell Grant and up to $10,000 in debt relief to non-Pell Grant recipients. The income qualifications to receive discharge of these federal loans is $125,000 for an individual or $250,000 for a household.

The discharge will not be automatically granted. YOU MUST APPLY. Here are steps to take to determine eligibility and ensure you do not miss important student loan updates. 

To apply visit the Federal Student Aid website. You do not have to log in or provide any documentation. 

To determine your forgiveness eligibility: 

1. Visit the Department of Education website for student loans.

  • Log in to the site. If you have not previously logged in to view your accounts, select, “Create Account."

2. Once logged in, make sure all contact information is current. From the dashboard on this site, you will be able to determine:

  • If you received Pell Grants (this is key to receiving a discharge of $20,000 versus $10,000),
  • The servicer of your loans,
  • The type of loan you have, and
  • The amount owed in federal student loans. 

3. Visit the Department of Education subscription page to register to receive notifications about the discharge application. The application is now open.

4. The deadline for applying for the $20,000 or $10,000 discharge is December 31, 2023.

Most types of federal student loans are eligible for this discharge. Those include:

  • Undergraduate and Graduate Direct Loans
  • Parent PLUS and Grad PLUS loans
  • Consolidation Loans (with original loans disbursed on or before June 30, 2022).
  • Some Federal Family Education Loans (FFEL – see below) "Borrowers with FFEL Program loans and Perkins Loans not held by ED, who applied to consolidate into the Direct Loan Program prior to September 29, 2022, are eligible for the one-time relief," (Office of Federal Student Aid). *
  • Programs Loans held by the Education
  • Perkins Loans held by the U.S. Department of Education (ED)
  • Defaulted loans (ED held or commercially services subsidized, unsubsidized parent PLUS, grad PLUS, and Perkins held by ED)

Tax Implications

Another benefit of this discharge of federal student loan debt, is that the amount forgiven will be free from federal income tax. Laws impacting state and local taxes vary and should be discussed with a local tax official.

If you have questions regarding this process, contact the Department of Education on its website or contact an AFS Student Loan counselor at 800.895.4795.

*If you have FFEL loans that were not placed in forbearance during COVID, those loans DO NOT qualify for the discharge unless they were consolidated into a Direct Loan on or before 9/29/2022). 


Published Sep 26, 2022.