If i consolidate my student loans can they still be forgiven

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• The student loan forgiveness application went live on Monday. You can find it at StudentAid.gov.
• Are there any questions we didn’t answer about Biden’s new student loan plan? If so, email me to add your question.
• Since the announcement, we've received dozens of questions from borrowers, and we're continuing to dig around to find the best answers. Keep checking this FAQ for updates in the coming days and weeks.

If you have student loans, you probably have a lot of questions.

President Joe Biden made a historic move in August, canceling up to $20,000 in student loan debt for millions of borrowers. But there’s a catch: Not everyone will qualify for it. Eligible borrowers must apply through the complicated federal loan servicing system before the end of the year and keep a close eye on their balances for any mistakes. 

Biden also extended the pause on monthly student loan payments, which won’t resume until at least January, and announced a new plan to create a more affordable income-driven payment program. 

So, now what? You may wonder how exactly the new student loan relief plan will be implemented, and how to know if you qualify for forgiveness.

We asked our readers their questions about Biden’s new student loan relief, and I dug around for answers. As more details become available, we’ll update this FAQ in the coming days and weeks. Here’s what we know so far:

Everything You Need to Know About Biden’s Student Loan Forgiveness Plan

Who qualifies for debt forgiveness?

Anyone with federal student loans who meet the income limits. Borrowers who make less than $125,000 per year qualify and married couples with a combined income of $250,000 or less qualify. If you didn’t finish college but have federal student loan debt and meet the income requirements, you qualify for forgiveness. 

If I qualify, how much of my student loan debt will be forgiven?

Borrowers who make less than $125,000 will receive up to $10,000 if they didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if they did. 

Student loans and the racial wealth gap

Black Americans are likely to have more student loan debt than their white peers. According to research from the Brookings Institute, Black graduates hold “nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts.” Black Americans also make less money and have one-sixth the wealth of white Americans on average, making it more difficult to escape the cycle of debt. This disproportionate burden reinforces the racial wealth gap and explains why experts say Biden’s plan isn’t enough for Black Americans.

What type of student loans qualify for forgiveness?

The federal student loan system is complicated, and loans come with various names and terms depending on when they were taken out and for what purpose. Generally, most federal student loans qualify for forgiveness, including Pell Grants, government-owned FFEL loans, and Direct Loans such as Parent PLUS and Grad PLUS loans. Certain loans from the Federal Perkins Loan Program and FFEL loans with private lenders are excluded. All private student loans are also excluded.

Are FFEL loans or Parent PLUS loans eligible for forgiveness?

Borrowers with Federal Family Education Loans or Parent PLUS loans owned by the government will see $10,000 in cancellation if they meet the income limits.

But if a private lender owns your FFEL loans, it’s likely excluded from receiving debt relief unless you consolidated it before Sept. 29. The U.S Department of Education initially said borrowers with these loans could call their servicer and consolidate them into the Direct Loan Program to become eligible for forgiveness, but now has reversed course. Federal student loans guaranteed by the government but held by private lenders must have been consolidated before Sept. 29 to be eligible for debt relief, according to its website.

The department says it’s assessing whether there are “alternative pathways” for these borrowers. Still, it’s worth contacting your loan servicer to determine which type of loans you have and if you can work with them to forgive any commercially-owned FFEL loans.

What do I need to do if I qualify? 

The Department of Education said they have income data for nearly 8 million borrowers, which means they may be eligible to receive relief automatically. But many people who qualify for forgiveness need to provide their income information to the Department of Education, which recently launched the student loan forgiveness application.

How will this affect your monthly payment?

Student loan forgiveness will likely decrease your monthly payments or eliminate them entirely. Biden said Wednesday during a speech that nearly 45% of borrowers, or almost 20 million people, would have their debt fully canceled, while 95% of borrowers would benefit from the plan in some way.

What’s the timeline for the student loan forgiveness application, and what kind of information will it require? 

The Department of Education officially launched the student loan forgiveness application in mid-October. The application for student loan forgiveness is short and requires no supporting documents or an FSA ID. It asks borrowers for their full name, Social Security number, date of birth, phone number, and email address. At the end of the application, borrowers must attest that they’re requesting federal student loan debt relief and their 2020 or 2021 income was below the income caps. It’s available in English and Spanish.

The income cap for forgiveness is $125,000. For which tax year? 

Your income is based on either your 2020 or 2021 federal tax return. You’re eligible if your adjusted gross income was under $125,000 in either 2020 or 2021. You find your income information on line 11 of the IRS Form 1040. 

Will any student loans that are forgiven be taxed?

Canceled debt is generally taxable, but student loans that are forgiven will be exempt from federal income tax because of a provision in the government’s 2021 American Rescue Plan. The provision prevents taxation on student loans forgiven through 2025. States likely won’t impose taxes, but details are still developing. 

Can I get a refund on student loan payments made during the COVID-19 pandemic?

You can get a refund for any payment (including auto-debit payments) you have made so during the payment pause, which began on March 13, 2020, according to studentaid.gov. It could take up to a few weeks or months, so contact your loan servicer to request that your payment be refunded as soon as possible.

If you’re still in college, would you be covered for forgiveness? 

Yes, current students with loans are eligible for this debt relief. However, if a parent claims you as a dependent on their taxes, the Department of Education will use their income to decide if you qualify. Borrowers who received student loans after June 30, 2022 are not eligible for forgiveness.

Do I have a Pell Grant? How do I find out?

Over 60% of borrowers are Pell Grant recipients, according to a White House fact sheet. It says “nearly every Pell Grant recipient came from a family that made less than $60,000 a year.” To find out if you have a Pell Grant, go to studentaid.gov and check your federal student aid history. You’ll find this information on your aid summary page once you’ve logged in with your FSA ID.

What if I paid off my loans before the COVID-19 pandemic? Do I get anything retroactively?

No, this is a one-time student loan cancellation plan. If you already paid off your student loans before the COVID-19 pandemic, you won’t receive a refund for those payments.

Will your loan be forgiven if you have not held a steady job and have not filed a tax return in either 2020 or 2021?

Any year you have minimal or no income, you may be able to skip filing your tax return and the related paperwork, according to the IRS. However, it’s legal to file a tax return showing zero income, and this might be a good idea to qualify for student loan forgiveness. Keep an eye out for guidance from your loan servicer.

Do student loans in default qualify for forgiveness?

Yes, all defaulted borrowers are eligible for forgiveness. In early April, the U.S. Department of Education announced borrowers with defaulted federal student loans will return to repayment without any past due balance when the pause ends at the end of the year, giving anyone with defaulted loans a fresh start at repayment.

If you’re taking out a student loan next year, will those also qualify for forgiveness? 

No, only federal undergraduate and graduate loans taken out before June 30, 2022 can qualify for forgiveness. 

If my federal direct loans were consolidated, will those loans be forgiven?  

Yes, federal direct loans that were consolidated are eligible for forgiveness. 

Does it matter if you attended a public vs. private university?

No, it doesn’t matter if you attended a public or private university. As long as you have federal student loans, you should be eligible. The U.S Department of Education said borrowers with commercially-owned FFEL loans (aka loans owned by a private company) can call their servicer and consolidate them into the Direct Loan Program to become eligible for forgiveness.

Is there a website or phone number I can go to apply for my student loan forgiveness? If so, is there a deadline?

Once the forgiveness application is completed, borrowers can expect relief within 4-6 weeks if approved. If you fill out the application before Nov. 15, you will receive relief before payments resume in January. The Department of Education will keep the application open until the end of 2023.

Will loans only be forgiven if you’re currently making payments, or can you forgive loans before they become active?

Student loans that were taken out after June 30, 2022 are not eligible for forgiveness under Biden’s new plan.

If my son just graduated college in May 2022 and his income makes him eligible for loan relief, but while he was a student he was still our dependent (he will not be claimed as our dependent anymore in the next tax year), will he still get loan forgiveness?

For students who were or are dependents, eligibility will be based on their parents’ income. Individual borrowers are eligible for the relief if their adjusted gross income in 2020 or 2021 was less than $125,000. Married couples and heads of households must make less than $250,000 to qualify. If you meet the income requirements, your son should be eligible for forgiveness, but the Department of Education recommends contacting your loan servicer to verify. Anticipate long hold times as loan servicers are dealing with a high volume of calls at this time. 

What legal challenges are affecting the student loan forgiveness plan? 

A federal appeals court temporarily blocked the student debt relief plan in October to allow a lawsuit from six GOP-led states to play out in court. Federal student loan debt won’t be discharged until the court makes a decision, but the White House urges borrowers to continue applying for student loan forgiveness. The federal appeals court could announce a ruling as soon as this week.