$20,000 of your student debt could be relieved: Here's how it works

Updated on August 29, 2022 at 4:56 PM

by Katelyn Owens

Student loans can be burdensome. That's why President Biden, Vice President Harris, and the US Department of Education have proposed an initiative that could help.

Joe Biden to relieve up to $20,000 of your student debt: Here's how it works

You could receive up to $20,000 of student debt relief through a new initiative put forward by President Biden, Vice President Harris, and the US Department of Education. The 3-part initiative is intended to help working- and middle-class individuals continue to pay back their student loans when the COVID-19payment pause is lifted.

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What are the 3 phases?

According to the US Department of Education, phase 1 of the plan is to extend the payment pause – which was due to expire at the end of August 2022 – until the end of December. This means that borrowers are not expected to continue paying back their loans until January 2023. Interest does not accrue during this time.

Phase 2 involves targeting debt relief to those most impacted by the COVID-19 pandemic, including working- and middle-class borrowers. Recipients of Pell Grants are eligible for up to $20,000 of debt relief if they make less than $125,000 per year (or $250,000 for households). Non-Pell Grant recipients are eligible for $10,000 of debt relief under the same conditions.

Finally, phase 3 aims to improve the manageability of student loans for current and future borrowers. President Biden and Vice President Harris have proposed a new-and-improved version of the income-driven repayment plan that could benefit borrowers by better protecting their income and offering loan forgiveness earlier on.

thumbnail — What are the 3 phases? Peter Dazeley

How do I apply?

While the exact application details have yet to be announced, eligible borrowers will have until 31 December 2023 to submit their online applications. To be notified when applications open, you can subscribe to the US Department of Education website.

If you work for a non-profit, the military, or certain levels of government, you may also be eligible for the Public Service Loan Forgiveness Program (PSLF). Temporary changes to the PSLF program mean that some borrowers could be eligible for additional debt relief. To see if this program applies to you, visit PSLF.gov and apply before 1 November 2022.

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