Mark your calendar for early October. That’s when Americans will be able to apply for federal student loan forgiveness. According to the U.S. Department of Education, tens of millions of borrowers will qualify for up to $20,000 in loan forgiveness. Read on for 4 steps to prepare to apply for student loan forgiveness.

1 Determine if you are within the income guidelines for student loan forgiveness

Borrowers are eligible for this relief in their individual income is less than $125,000 or is less than $250,000 for married couples. The Department of Education will be considering an adjusted gross income or AGI, which is different than your gross income. You can use your AGI from either your 2020 or 2021 tax return. If your income in either year fell below the caps, you should be eligible.

2 Determine if your loans qualify for relief

Borrowers will be eligible for loan forgiveness based on their loan type if they fall within the income guidelines above. Most federally held student loans qualify including Direct Stafford Loans and all Direct subsidized and unsubsidized federal student loans. Under the Direct program, Parent PLUS loans and Grad PLUS loans are also eligible for loan forgiveness. Finally, Federal Family Education Loans (FFEL) may be eligible for forgiveness if your loan payments were paused during the federal loan payment relief program.

The Department of Education will provide up to $20,000 in debt cancellation to Pell Grant recipients with loans held by the Department of Education, and up to $10,000 in debt cancellation to non-Pell Grant recipients.

3 Check if you have a Pell Grant

To determine the type of loans you have and see if you have a Pell Grant, log in to your Federal Student Aid Account. You will need your FSA ID Username, Email, or Phone, as well as your password to log in. If you forgot your login credentials, you could click “forgot my username” or “forgot my password” and follow the prompts. Once you are in your account, visit the “Aid Summary” page. Here you will find a listing of your student loans and any Pell Grants you received.

4 Submit the application for loan forgiveness

As we mentioned above, the application for student loan forgiveness should go live in early October. You can sign up for “Federal Student Loan Borrower Updates” and receive an alert when the application is live right on the U.S. Department of Education website.

Among the borrowers who will get automatic loan cancellations are those whose income data is already on file with the U.S. Department of education. If your income information is already on file, your eligibility can be verified without an application being filed. We recommend that you complete an application even if you believe the government already has your income information. It can’t hurt and may prevent a holdup in your getting the forgiveness for which you are eligible.

Once the application is up, request relief as soon as possible. By following these steps, you should be ready to request relief as soon as the application launches. The Department of Education is suggesting borrowers should aim to complete the application for forgiveness no later than November 15, 2022. It is estimated that it will take up to six weeks after the application is submitted for borrowers to receive the forgiveness for which they are eligible. 

Keep checking your account(s) in the months after you apply to see when the cancellation is processed.

Important Note

The government pause on federal student loans due to the pandemic is set to expire on December 31, 2022. In January, payments will begin. This is why it is recommended that you apply as soon as the application launches. If the forgiveness erases all of your debt, it will help you to avoid making any additional payments.

Other borrowers may see a reduced principal balance. You can review your repayment plan estimators on the Federal Student Aid website. You can also read more about different types of student loan forgiveness on this site.

At present, only federal student loans made before June 30, 2022 are eligible.