Up to $20K in Student Loan Forgiveness for Some Borrowers, and Payments Remain Paused


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President Joe Biden announced up to $20,000 of forgiveness for federal student loan borrowers on Wednesday, Aug. 24, 2022, and extended the student loan payment pause to Dec. 31, 2022. If you have remaining federal student loan balances after forgiveness, you won’t need to resume making payments on the remaining amount for another four months.

Here’s what you need to know about student loan forgiveness and the extension of the pause on student loan payments:

What this means for federal student loan borrowers

Many borrowers will benefit from President Biden’s announcement, but not all. If your annual income is more than $125,000 for single people or $250,000 for married couples who file a joint tax return, you won’t qualify for the forgiveness.

But if your income is below the threshold, you could see your federal student loan balances reduced by as much as $20,000. If you took out federal student loans and also received Pell Grants, you’re eligible to have $20,000 of your federal debt forgiven. If you have federal student loans but didn’t receive Pell Grants, your forgiveness amount is $10,000.

Important information: The amount of your forgiveness is capped at your debt. For example, if you received a Pell Grant while in college and have $25,000 in federal student loan debt, you can get $20,000 of it waived. But you’ll still be responsible for paying off the remaining $5,000 balance.

Payment pause extended ‘a final time’

President Biden also extended the payment pause for federal student loan borrowers until Dec. 31, 2022. In announcing the extension, the Department of Education said this extension would be the last one.

The CARES Act first introduced the payment pause in March 2020. Borrowers weren’t required to make payments on their federal student loans, and their loans didn’t accrue interest. The payment pause has now been extended seven times.

Nearly 37 million borrowers have had about $195 billion in loan payments waived between March 2020, when the deferral began, and April 2022, when the deferral was last extended, according to the Federal Reserve.

Important information: The payment pause didn’t apply to private student loans, or to Family Federal Education Loans (FFEL), which are held by commercial banks.

Learn More: What to Know About the CARES Act and Student Loans

When will student loan payments resume?

If you’ll still have a federal student loan balance after forgiveness, you’ll have to begin making payments again after Dec. 31, 2022. At least 21 days before your first payment is due, you’ll receive a billing statement or other type of notice that will include your payment amount and due date. You can also contact your loan servicer at any time to get an estimate of your payment and due date.

Before payments resume, the U.S. Department of Education recommends you:

  • Make sure your loan servicer has your correct contact information. You can log into your account on your servicer’s website or mobile app.
  • Review your autopay enrollment, or sign up for automatic payments. This can get you a 0.25% reduction in your Direct Loan interest rate.
  • Evaluate your repayment plan with the Loan Simulator tool. If your financial situation has changed since the deferral began, you may need to adjust your repayment plan.

Keep in mind: It can be a good idea to make payments on your federal student loans through the deferral period, if you’re financially able. The interest rate on all federal student loans is currently 0%, which means every penny you pay goes toward the principal on your loans — and you could pay them off faster.

What to do if you can’t make your student loan payments

If you won’t be able to make your federal student loan payments, you have some options that could help:

  • Talk to your loan servicer about a different repayment plan. Four main types of income-driven repayment plans are available to help set your monthly payment at an affordable level, based on your family size and income.
  • Consider consolidation. A federal Direct Consolidation Loan merges multiple federal student loans into one — and allows you to extend your repayment period up to 30 years. A longer repayment period could reduce your monthly payments, although your new interest rate won’t necessarily be lower than your current rates.
  • Consider refinancing. If you’re not eligible for income-driven repayment or student loan forgiveness, refinancing with a private student loan could get you a lower interest rate, or help you pay off your loans faster. Just keep in mind that you’ll lose access to federal loan benefits, like IDR plans and forgiveness programs.
  • Explore deferment or forbearance. If you can demonstrate economic hardship, are in the military, or meet other qualifications, you may be able to ask your servicer for one of these options that pause your payments for a certain number of months. Keep in mind, though, that interest may continue to accrue and neither option will help you pay off your loans faster.
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Keep Reading: The Complete List of Student Loan Forgiveness Programs

About the author

Evelyn Pimplaskar

Evelyn Pimplaskar is Credible’s editor-in-chief. Her career has spanned nearly every form of writing and editing, from newspaper and magazine articles, to press releases, case studies and online content. She’s covered topics ranging from volatile local elections and tools to dissuade birds from roosting on commercial buildings, to income taxes, student loans, investing, borrowing and saving.

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