Student Loan Forgiveness Plan – What You Need to Know #2

Applications for the Federal student loan forgiveness program were suspended by the Biden administration on Friday, November 12, 2022, one day after a Federal judge in Texas struck down the program as unconstitutional. The Biden administration is appealing this decision. We present the following information in the event the program is able to lawfully reopen.

Who is eligible?

A borrower must have federal student loans received on or before June 30, 2022. Private student loans are not eligible, and federal loans paid off before March 2020 are also not eligible.

Loan types that qualify for student loan forgiveness include the following:

  • Undergraduate and graduate Direct loans
  • Parent PLUS loans and Direct PLUS loans given to graduate and professional students
  • Consolidation loans (with underlying loans held by the Department of Education and disbursed on or before June 30, 2022)
  • Federal Family Education loans (FFEL) loans and Perkins loans must be held by the federal government in order to qualify. Federal Family Education loans and Perkins loans that are not held by the federal government are not eligible for forgiveness. However, those borrowers that had loans that were not held by the federal government but applied for a direct federal consolidated loan before September 29, 2022, should be eligible for loan forgiveness.

If you continued to make payments on federal student loans during the payment pause starting in March 2020, or if you paid off those loans during the payment pause, those payments may be refunded.

The next step in determining eligibility is based upon income thresholds for the 2020 or 2021 taxable year.

  • Individuals filing single for the 2020or 2021 tax year earning less than $125,000 in adjusted gross income (AGI)
  • Married couples filing jointly or individuals filing as heads of household earning less than $250,000 in AGI in either year.
  • Those who received a Pell Grant as part of their aid package are eligible for a maximum of $20,000 of debt relief.
  • Those who did not receive a Pell Grant are eligible for a maximum of $10,000 of debt relief.

Debt relief is capped by the amount of the borrower’s qualified outstanding debt. For example, if a borrower is eligible for $10,000 in debt relief and has a balance of $8,000 on the qualified loan, the borrower will receive $8,000 of debt relief.

How and when should I apply for student loan forgiveness?

If the program is reopened, the application website is Standard personal information is required to apply for loan forgiveness.

As a result of a recent court order, the federal student aid office is temporarily blocked from processing debt discharges.

The Education Department has a toll-free hotline for borrowers who have questions about the application: 833-932-3439.

Blog author: Joseph Becht, CPA, CGMA, Senior Manager, Small Business Department at Tronconi Segarra & Associates LLP. He can be reached at 716.633.1373 or


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