Biden's Student Loan Relief: How To Apply For Forgiveness In PA

PENNSYLVANIA — The historic student loan relief program signed into law by President Joe Biden will have an enormous impact on borrowers in Pennsylvania.

The plan will forgive $10,000 in student loan debt for some borrowers in Pennsylvania. It also cancels an additional $10,000 for those who received federal Pell Grants to attend college.

Some 2.1 million Pennsylvanians owe $71.5 billion in total outstanding debt, according to Lending Tree's Student Loan Hero. The average borrower is $33,426 in arrears, with an average monthly payment of $283.

Pennsylvanians will not be taxed on the relief, Gov. Tom Wolf said.

“Cumulative federal student loan debt is holding back Pennsylvanians who want to pay their bills, afford housing and have a little financial breathing room all while obtaining meaningful employment and a successful career," the governor said. "Given this positive action at the federal level, my administration does not intend to burden these Pennsylvanians with a tax bill following this beneficial action."

Pennsylvania has already taken action on student loan debt at the state level, with a massive boost for nurses hit hard by the pandemic signed in early 2022. Broader loan forgiveness was proposed in the state legislature in February, but has not gained much traction.

Determining qualification

In order to be eligible for this relief package, your annual income must be $125,000 or less. For couples filing taxes jointly, their yearly income must be below $250,000. If you received a Pell Grant in college and meet the income threshold, you’re eligible for up to $20,000 in debt cancellation.

The Department of Education will use income information from 2020 or 2021 to determine eligibility, according to the Washington Post.

Relief is also limited to the amount of your outstanding debt. For example, if you’re eligible for $10,000 in debt relief but have a remaining balance of $5,000, you will only receive $5,000.

Private loans are not eligible for relief.

Receiving loan forgiveness

Nearly 8 million borrowers whose income information is already available to the agency will receive their relief automatically, according to the U.S. Department of Education.

An online application will soon be launched by the Department of Education for those whose income information is not with the agency. The application will be available through Dec. 31.

Sign up for email alerts through the Department of Education to be notified when the application is open.

How it all works

Biden's proposal differs from the plans already offered by the Department of Education. It aims to create a new program that substantially reduces future monthly payments for lower- and middle-income borrowers.

The new plan will ensure borrowers pay no more than 5 percent of their monthly discretionary income on undergraduate loans, down from 10 percent under the current income-driven repayment plan. The new program will also raise the amount of income considered non-discretionary, protecting it from repayment.

For those who already took student loans in 2022

Loans must originate before July 1 to qualify. Current students will qualify for loan forgiveness if their parent's income is below the required amount, the Post reported.

Student loans will automatically pause through the end of the year.