Bidens Student Loan Forgiveness

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By Jordan Martinez

President’s Joe Bidens federal student loan forgiveness program is one of the biggest loan forgiveness programs from the government for main street. Unfortunately, the plan is on hold due to legal challenges.

This Content is for informational purposes only; you should not construe any such information or other material as legal, tax, investment, financial, or other advice. I am not a financial advisor.

This plan would decrease student loan balances of millions of people. Decreasing their balances as much as $10,000-$20,000. Tens of millions of people will qualify for this program, including myself. Students with high incomes will not receive any relief.

On August 24th, Biden also extended the pause of student loan payments hinting that the current loan programs might see a proposal in which will have an income-driven repayment plan. Mr. Biden extended the pause until at least next year.

Who qualifies for student loan cancellation?

Eligibility will be based on the students adjust gross income. According to the IRS, “Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income.”

But individuals who are single and earn under $125,000, who didn’t receive a Pell Grant, will qualify for a $10,000 debt cancellation. The student receiving a Pell Grant and earning under $125,000 could qualify for the $20,000 debt cancellation.

What are the legal challenges to the plan?

The plan is facing several lawsuits questioning the validity of the plan and that the Department of Education is overreaching.

Lawyers from the Department of Justice provided a statement stating, “congress gave the department expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergency.”

How would the government know what my income was?

The Department of Education has information from previous tax filing and previously submitted repayments plans. They say, they already have nearly 8 billion borrowers on file.

What year is the income threshold based on?

The income threshold is based on a borrower’s adjusted gross income for either the tax year of 2020 or 2021.

How will the Department of Education know if I received a Pell Grant?

They use their own administrative data they have on file. They’re also working on making and improving online accounts to make your Pell Grant history clearer.

What if I was claimed as a dependent?

If you were claimed as a dependent during the 2021-2022, the eligibility than depends on parental income, not your own.

I didn’t finish my degree; do I qualify?

No, you do not, unfortunately.

How do I apply?

The Department of Education already has notified many borrowers and those borrowers do not need to do anything else. For the others that were not notified, the department has created and application online, that is currently blocked.

Will I have to pay federal taxes on the canceled debt?

No. The government and the Department of Education created a temporary tax rule created as an exception for the Student Loan Forgiveness program. Student loan debt forgiven from 2021 through 2025 doesn’t count as taxable federal income.


The student loan forgiveness plan signed by President Joe Biden would relieve students struggling to repay their debt. Not only is this the biggest debt cancellation signed by an executive order but this hasn’t been done before and you are seeing it play out in front out our eyes with the lawsuits and website blackouts. But I have faith this will clear the courts and sutdents needed the assistance will get the assistance.

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