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October 18, 2022

The Federal Student Loan Forgiveness Plan Explained

A lot has happened since the Biden-Harris Administration’s Student Debt Relief Plan was announced in August. We’re here to help you break through the noise and figure out what it all means for you. Here’s what we know so far:

What’s happening?

On August 24, 2022, President Biden announced a Student Debt Relief Plan that is projected to provide debt relief to 43 million borrowers. According to the plan, these borrowers will be eligible for up to $20,000 in student loan forgiveness if they:

  • Took out a student loan before June 30, 2022.
  • Have an annual income below $125,000 (for individuals) or $250,000 (for married couples or heads of households)

The maximum amount of debt cancellation you’re eligible for depends on two things: the amount of your outstanding debt and whether you received a Pell Grant in college.

  • If you received a Pell Grant in college you could be eligible for up to $20,000 in debt cancellation.
  • If you did not receive a Pell Grant, you could be eligible for up to $10,000 in debt cancellation.

In either case, your total debt cancellation amount is capped at the amount of your outstanding debt.

How do I know if my annual income falls within the threshold?

Under this plan, the US Department of Education uses Adjusted Gross Income (“AGI”) to confirm the income thresholds. The quickest way to determine your AGI would be to look at your latest tax return. Your Form 1040 should state your AGI at line 11 on the front page.

How do I know if I received a Pell Grant?

You can find the details of your financial aid and student loan history on the Federal Student Aid website, on the “Aid Summary” page. This will include any Pell Grants received.

What loans are eligible?

Not all federal loans are eligible for the relief plan—here’s a list of eligible loans:

  • William D. Ford Federal Direct Loan (Direct Loan) Program loans
  • Federal Family Education Loan (FFEL) Program loans held by the US Department of Education or in default at a guaranty agency
  • Federal Perkins Loan Program loans held by the US Department of Education
  • Defaulted loans (including US Department of Education-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, Parent PLUS, and Graduate PLUS; and Perkins loans held by the US Department of Education)
  • Consolidation loans, as long as the underlying loans were held by the US Department of Education and were disbursed on/before June 30, 2022.
  • Consolidation loans consisting of any FFEL or Perkins Loans not held by the US Department of Education, as long as the borrower applied for consolidation before September 29, 2022.

💡Tip: The Federal Student Aid website also has a “Loan Breakdown” section that will allow you to review all the federal student loans you have received.

How do I apply for federal student loan forgiveness?

According to the Federal Student Aid website, there are two ways you will be able to apply for the student loan forgiveness program:

  • Automatically: If the US Department of Education has your income data, you may be eligible to receive relief automatically.
  • Manually: The Administration launched a simple application process which is now live and accessible via this link.

The deadline to submit an application for forgiveness is currently December 31, 2023. According to the Federal Student Aid website, once the application is complete, relief can be expected within 4 to 6 weeks. Borrowers are therefore encouraged to apply before November 15, 2022 in order to receive relief before the payment pause expires on December 31, 2022.

💡 Tip: Subscribe to the Department of Education’s Federal Student Loan Borrower Updates to stay informed!

What about taxes?

You should consult your own tax, legal and accounting advisors about deductibility of interest.

What does this mean for Stride Funding members?

The federal loan forgiveness announcement only applies to federal loans and does not include private funding options like Stride. However, we are committed to ensuring that Stride remains an affordable, flexible option for students, and we take several steps to protect our members when they can’t afford to pay.

Here are a few ways we protect our members:

  • Your Stride Income Share Agreement (ISA) does not accrue any costs when you’re in school or not working.
  • You aren’t required to make payments in months when you’re unemployed or earning below the minimum income threshold.
  • You have access to career support services and job search resources to help you land a job or advance your career when and if you need a little help getting back on track.

💡 Tip: If you benefit from the student loan forgiveness plan, this means you can focus on making payments towards your Stride ISA. While we don’t recommend paying off your Stride ISA early (as this would result in you owing the full maximum payment amount), we always recommend making on-time monthly payments in any and all months in which you are able to pay. Why? Stride ISA payments are based on a percentage of your income, and as time goes by, your income is likely to increase. Sticking to your monthly payments and making them on time will not only save you money in the long run, but it will help you get out of student debt (and on with your life) sooner!

Have more questions?

Have more questions about repayment or how the Federal Student Loan Forgiveness affects your Stride ISA? Want to learn about our career support options? Just want to say, “Hi?” Give us a call at (214) 775-9960, 8AM to 8PM ET Monday through Friday, or email us at