The Biden administation is preparing to roll out a new student loan forgiveness plan that would provide relief to borrowers based on hardships. Borrowers may be able to apply starting this fall. But the exact timeline is far from certain.

Unlike other elements of President Biden’s new debt relief initiative, which could result in automatic loan forgiveness for millions of borrowers, the hardship route would require an application. The Education Department has already released a preview of factors that could help officials determine whether a borrower is experiencing a hardship that would justify loan forgiveness. And more concrete draft regulations are expected soon.

Hardship-based student loan forgiveness is part of a broader Biden administration plan to create a robust new debt relief initiative. The new program, designed as a second attempt to enact mass debt cancellation after Biden’s original plan was overturned by the Supreme Court last year, is grounded in a different legal authority. And administration officials hope that the Education Department’s year-long process of establishing new regulations will insulate the plan from anticipated legal challenges.

The new program would provide relief to four groups of borrowers. This includes those who have experienced runaway interest, first entered repayment at least 20 or 25 years ago, attended “low-value” schools that lost their eligibility for federal student aid, and borrowers who qualify for existing student loan forgiveness programs but haven’t enrolled. The Education Department released draft regulations for these categories last month, and a public comment period is set to end later this week.

What happened to Biden’s student loan forgiveness program?

The beta site is being unveiled about a month after the Supreme Court rejected President Joe Biden’s one-time $441 billion debt relief program.

Under that initiative, borrowers who earned less than $125,000 ($250,000 for married couples) would have been able to qualify for forgiveness of up to $10,000 of outstanding federal loans. Borrowers who received Pell Grants to pay for part of their education could have been eligible for up to $20,000 of loan forgiveness.

Following the Supreme Court ruling, the Department of Education is prohibited from forgiving any federal loans under this program.

Who qualifies for student loan forgiveness?

After the Supreme Court struck down the forgiveness plan, the Biden administration set up a Student Loan Relief Committee to engage in “negotiated rule-making” over the next few months to discuss the next steps for student debt relief. It’s unclear if any new forgiveness program would have the same eligibility requirements as the first one, but the administration has indicated that it will prioritize relief for borrowers with financial hardship.

Although Biden’s student loan forgiveness plan isn’t available anymore, you might still qualify for loan forgiveness if any of the following apply:

• You work full-time in public service for 10 years and make 120 qualifying payments on your federal student loans.
• You’re a teacher in a low-income school or at an educational service agency for five consecutive years.
• You’re a nurse or nurse faculty member serving a high-need population in a critical shortage area.
• You qualify for Perkins loan cancellation.
• You’ve experienced a total and permanent disability.
• You have another qualifying reason for student loan discharge, such as being defrauded by your school.
• You make payments for 20 or 25 years on an IDR plan.

How do I apply for student loan forgiveness?

The application process for student loan forgiveness will depend on the program you pursue. Here are some steps you might take, depending on the program:

• Public Service Loan Forgiveness (PSLF). To apply for PSLF, use the PSLF Help Tool to generate and submit the PSLF & Temporary Expanded PSLF (TEPSLF) certification and application to your loan servicer. Submit this form annually so your servicer has a record of your progress. When the 10 years are up, you’ll submit a final PSLF form to federal student loan servicer MOHELA.
• Teacher Loan Forgiveness. Submit this Teacher Loan Forgiveness Application to your loan servicer(s). You’ll need the chief administrative officer of your school or agency to complete the certification section of this application.
• Nurse CORPS Loan Forgiveness. You can apply through your account on the Health Resources & Services Administration’s (HRSA) site. This guide explains the process in greater detail.
• IDR plan forgiveness. Your loans should automatically qualify for forgiveness after you’ve spent 20 or 25 years in repayment. Reach out to your loan servicer about any steps you may need to take.
• Total and permanent disability (TPD) discharge. Borrowers with a total and permanent disability may get an automatic discharge of their student loans. If you don’t, you can complete a TPD discharge application and submit it to the servicer. Along with your application, you’ll need to provide supporting documentation from the U.S. Department of Veterans Affairs (VA), the Social Security Administration (SSA) or an authorized medical professional.

What will happen to my student loans?

Without the debt forgiveness program as an option, federal loan borrowers will need to make plans for repayment. The federal payment freeze—which has been in effect since March 2020—ends in September, and borrowers must start making payments in October.

When do student loan payments resume?

Interest begins accruing on loan balances on September 1, 2023, and payments will resume in October.

Can I defer my student loan payments beyond October?

You may qualify for a federal loan deferment and pause your payments depending on your circumstances. Common types of forbearance or deferment include:

• Cancer treatment deferment. If you’re diagnosed with cancer and undergoing treatments, you can submit a request to postpone your payments during your treatments and for six months after your treatment ends.
• Economic hardship deferment. If you receive government benefits, such as welfare, work full-time but earn 150% of the federal poverty guidelines or less, or are serving in the Peace Corps, you may be eligible for economic hardship deferment. You can postpone your payments for several months at a time, up to a maximum of three years.
• In-school deferment. If you’re a borrower looking to return to school to earn another degree, such as a master’s or doctorate, you can defer payments while in school and for up to six months after you graduate or drop below half-time status.
• Unemployment deferment. If you lost your job and are receiving unemployment benefits, you may be able to postpone your payments for up to three years under the unemployment deferment program.

Are there other student loan forgiveness programs?

Even though the Supreme Court blocked the one-time debt relief program, borrowers may qualify for other loan forgiveness programs, including:

• Public Service Loan Forgiveness (PSLF). Federal loan borrowers can qualify for loan forgiveness if they work for a qualifying public service employer, including 501(c)(3) not-for-profits and government agencies. They must work for a qualifying employer full-time for 10 years and make 120 payments under a qualifying payment plan. For borrowers pursuing PSLF, MOHELA is their loan servicer. Any existing loans will be transferred to MOHELA when the borrower notifies their current servicer of their intentions to apply for PSLF.
• Teacher Loan Forgiveness. Teacher Loan Forgiveness provides up to $17,500 in loan forgiveness to teachers who work for five full and consecutive academic years in a low-income school or education agency and teach high-need subjects.
• Income-driven repayment (IDR) discharge. Under an IDR plan, you get a reduced payment based on your discretionary income and a new loan term of 20 or 25 years. The government forgives the remaining amount if you still have a loan balance at the end of your loan term.

How do I know if my student loans are forgiven?

If you qualify for loan forgiveness under PSLF, Teacher Loan Forgiveness or IDR discharge, the loan servicer or Department of Education will send you a notification letter. Depending on your account settings, you may receive the letter electronically or via mail. It will state the amount of forgiveness you received and the date the loans were discharged.

If you made payments beyond the forgiven balance, you’ll receive a refund of the excess amount.

How is student loan forgiveness taxed?

Student loan forgiveness isn’t taxable at the federal level through 2025, due to the American Rescue Plan Act. After that, how loan forgiveness is taxed varies by program:

• PSLF. Loans forgiven under PSLF are not taxable as income.
• Teacher Loan Forgiveness. Previously, the loan balance forgiven through Teacher Loan Forgiveness was taxable as income. However, loans forgiven on or after January 1, 2021 are exempt from federal income taxes.
• IDR discharge. The loan balance forgiven under IDR plans is subject to federal income taxes.