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What You Should Know About Student Loan Cancellation

Posted November 2, 2022
3:44 pm

By Tonya Sams

Millions of student loan borrowers breathed a sigh of relief earlier this year when President Biden and the Department of Education cancelled some federal student debt.

To qualify for student loan cancellation, borrowers must have earned an annual income below $125,000 for individuals or below $250,000 for couples or heads of households for 2020 or 2021.

If you meet the income qualifications and received a Pell Grant, a maximum of $20,000 in federal student loan debt will be cancelled. The government will cancel up to $10,000 in federal student debt if the borrower did not receive a Pell Grant. Most borrowers will need to apply for the cancellation. However, a small number of borrowers will have the debt cancellation applied automatically because they have already submitted their income for 2020 or 2021 as part of their federal student loan application or because they enrolled in an income-driven repayment plan. If you are not sure if this applies to your student loan debt, apply for the cancellation.

Student loan cancellation includes:

  • Federal loans held by the Department of Education
  • Loans issued directly by the federal government
  • Both undergraduate and graduate school loans
  • Parent PLUS loans (loans taken out by a parent for a child or grandchild)

“Almost half of the forty-three million borrowers with federal student loan debt will be eligible to have their entire balances wiped out,” said Joshua Rovenger, Senior Attorney at The Legal Aid Society of Cleveland. “Cancelling this debt is also a significant step towards reducing the racial wealth gap. Student loan debt disproportionately harms black and brown students. Data shows that due to structural and historical barriers, black and brown borrowers have to borrow more federal student loan debt than white counterparts.”

“This cancellation is also critical for low-income borrowers. For some, a monthly student loan payment can make it impossible to put food on the table,” he said.

Unfortunately, the loan cancellation does not include private student loans or federal loans that are held by a commercial entity. But there is an exception for commercially-held federal loans (called commercially-held “FFEL loans”) – if you have applied to consolidate those loans before September 29. Consolidation is the act of combining all federal student loan debts into one loan.

Borrowers in Ohio will not take a hit when it comes to their taxes – the IRS will not tax the cancelled debt for loans that are forgiven between 2021 and 2025. The state of Ohio is following suit and will not tax the cancelled debt.

Applying for loan cancellation is free so beware of any companies that are charging you for cancellation or guaranteeing quick loan cancellation.

The application is available at: It is recommended that you should apply for cancellation by November 15. By applying by this date, it can help you get relief before loan debt repayment resumes on December 31. You can continue to apply for relief after that date until the end of 2023.

For more information on student loan cancellation, visit Legal Aid’s website:

Story published in The Lakewood Observer: What You Should Know About Student Loan Cancellation

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