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One-time Student Loan Debt Relief

This could be you when your loan is forgiven!

In August of this year, the Biden-Harris administration rolled out a Student Debt Relief Plan that includes one-time student loan debt relief, which you can read as either a refund (if you've been making payments) or forgiveness of part of your loan.

This is huge news! For many people, especially in the Millennial generation, student loans are our biggest source of debt. And applications for this debt relief are open as of this month, October. (See a preview of the application HERE.) In this blog post, I want to give you all the relevant information you need to know if you're eligible for this relief, and if you are, how to apply for it. I want you to get that debt-monkey off your back!

So what is the one-time student loan debt relief? According to Federal Student Aid "The U.S. Department of Education (ED) will provide up to $20,000 in debt relief to Federal Pell Grant recipients and up to $10,000 in debt relief to non-Pell Grant recipients." Yup, you read that right. You could receive relief for between $10,000-$20,000. Don't sleep on this money. Let's talk about how you qualify.


You are eligible for this relief if your individual income is less than $125,000 or your household income is less than $250,000. This is based on income reported on your taxes for the years 2020 and 2021.

If you received a Pell grant, even just one, and meet the income requirements above, you are eligible for up to $20,000 in relief.

If you did not receive a Pell grant, but still have federal (not private) student loans and meet the income requirements above, you are eligible for up to $10,000 in relief. Loans that qualify are undergraduate and graduate direct loans, parent PLUS and grad PLUS loans, consolidated loans, Federal Family Education Loans (FFEL) held by the ED, Perkins Loans held by ED, and defaulted loans. These loans must have an outstanding balance as of June 30, 2022. This means if you are/were a student taking out loans for education OR a parent paying for your children's loans, and meet the listed requirements, you are eligible for relief.


The Education Department is attempting to make the application process as seamless as possible, so you will only need to fill out a short form online (preview HERE) to apply for debt relief. There will be nothing to upload and you don't need your FSA ID.

The application is being released this month, October 2022, and you have until December 31, 2023 to submit your application. Don't miss the deadline!

In the meantime, you can prepare for the application by ensuring your contact information is current in your account, and if you don't have an account, you should create one. ED will send email and text message updates about submission, reception, and approval of your application. You can also sign up HERE to subscribe to the ED page and get regular updates.

Useful information

This article has a great FAQs section, but I want to reiterate some pieces of information here.

  1. Your remaining loan balance will determine how much relief you receive. If you meet the income requirements, you are eligible for up to $10,000 (non-Pell grant loans) or $20,000 (Pell grant loans). If your remaining balance is lower than the amount you qualify for, you will receive up to the amount of the balance. You will know the amount you are approved for once you submit your application.

  2. If you still have a balance after the relief is applied, your monthly payment will be recalculated based on your new balance potentially reducing your monthly payments.

  3. Your one-time debt relief is not subject to federal taxes but state and local taxes may apply.

Call to action

If you qualify for this debt-relief, then apply! It's free money either refunded or forgiven. Either way, it reduces your debt which is always a benefit. Take advantage of this situation.

I would also encourage you to proactively think what you will do with the money if you receive it back (as some debt-relief will show as a reduction of balance rather than a refund). Think about your current financial goals. Can you apply this money there? Or if you don't have any financial goals yet, think about the financial area that is causing you the most stress. Can you apply this money to that situation? You are more likely to use this money according to your values if you proactively plan for it.

Lastly, celebrate! For some, this will reduce an entire loan. For others, this might make you debt free. Whatever your status after this relief, there is cause to celebrate because by applying, you took an active step in your financial fitness journey. Go you!

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