President Biden has announced that an additional 125,000 Americans have been approved for $9 billion in student debt relief. This effort is the result of improvements to the U.S. Department of Education’s income-driven repayment (IDR) plans, the Public Service Loan Forgiveness (PSLF) program, and automatic relief for borrowers with total and permanent disabilities. With this latest announcement, the administration has now canceled $127 billion in student loan debt for nearly 3.6 million Americans.
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Student Loan Payment Pause Ends
The pause on student loan payments and 0% interest ended on September 1, 2023. Borrowers resumed payments in October. However, through updates to repayment programs and new provisions, many borrowers may still qualify for student loan debt relief.
Public Service Loan Forgiveness (PSLF)
Who Qualifies for PSLF?
If you are employed by a government or not-for-profit organization, you may be eligible for the PSLF program. Under this program, the remaining balance on your Direct Loans can be forgiven after making 120 qualifying monthly payments under an approved repayment plan while working full-time for a qualified employer.
Tax Benefits of PSLF
According to the IRS, student loan amounts forgiven under PSLF are not considered federal taxable income. However, borrowers should be aware that some states may tax forgiven amounts. Consult with a tax advisor or the IRS for detailed information.
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Learn More About PSLF
To explore your eligibility and the application process, visit the Department of Education’s PSLF resource page.
Income-Driven Repayment (IDR) Plans
Benefits of IDR Plans
Most federal student loans qualify for at least one income-driven repayment plan. These plans are designed to make loan payments more affordable for borrowers with high loan balances compared to their income. Earlier this year, the SAVE plan was introduced, offering monthly payments as low as $0 for eligible borrowers. This plan also ensures that loan balances do not grow due to unpaid interest.
Loan Simulator Tool
The Department of Education’s Loan Simulator is a valuable resource for borrowers. It allows you to calculate payments, compare repayment options, and decide whether to consolidate your student loans.
Total and Permanent Disability (TPD) Discharge
Eligibility for TPD Discharge
Borrowers who are 100% disabled may qualify for a discharge of their federal student loans or TEACH Grant service obligations. Veterans with a 100% service-connected disability rating or an individual unemployability rating are eligible. Additionally, borrowers receiving Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI) may qualify by providing documentation to the Department of Education.
Tax Considerations
Loans discharged under the TPD program between January 1, 2018, and December 25, 2025, are not considered federal taxable income. However, borrowers should consult with their state tax office or a tax professional regarding potential state tax implications.
Resources for Active Duty Service Members
Active Duty Loan Benefits
Active-duty service members have access to several benefits regarding student loan repayment:
- Payments made while on active duty may qualify for PSLF.
- Interest on loans taken out before military service is capped at 6% during active duty periods.
For more information, check out the Federal Student Aid for Members of the U.S. Armed Forces guide.
Impact on G.I. Bill Benefits
This announcement does not impact G.I. Bill benefits. However, for veterans, service members, and their families, the student loan relief initiatives can provide significant financial relief.
The Biden administration’s commitment to student debt relief continues to offer critical support for millions of Americans. From expanded eligibility for PSLF to new IDR provisions and TPD discharges, these programs provide options for borrowers seeking financial stability. Stay informed about your options and take advantage of available resources to manage or eliminate your student loan debt.
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