Student Loan Forgiveness Calculator: Check If You Qualify
President Joe Biden recently made a historic announcement about student loan forgiveness: federal student loan borrowers who meet income requirements are eligible for up to $20,000 in loan cancellation.
However, many were left with questions about the finer details of the program. Use our student loan forgiveness calculator below to see if you qualify for loan forgiveness and how much debt you can forgive.
Who is eligible for student loan forgiveness?
To qualify for this forgiveness program, you must have federal student loans and meet certain income requirements. The income limit is based on your adjusted gross income (AGI) in the 2020 or 2021 tax year. People who earn less than $125,000 a year (or $250,000 if filing taxes jointly) are eligible. If you qualify in any of those years, you can get a waiver.
How much student loan debt can be forgiven?
If you meet the income criteria and owe money on federal student loans, you are eligible for $10,000 in student loan forgiveness or up to your current loan balance, whichever is less. If you received a Pell Grant along with your student loans, you are eligible for loan forgiveness of up to $20,000.
How to Apply for Biden’s Student Loan Forgiveness Program
Most borrowers have to submit a simple application before their loan forgiveness is processed. The app is expected to be released in early October. Subscribe to the Department of Education mailing list to be notified when applications are open.
After you submit the application, expect loan forgiveness in four to six weeks. The Department of Education will accept applications until December 31, 2023 and process them as they are received. However, if you want to have your loan forgiven before payments resume on January 1, 2023, the department recommends submitting an application by November 15, 2022.
About 8 million borrowers will have to do nothing to get forgiven. If the government has recent income data for you, it can automatically process your loan cancellation. If you’re not sure if this describes you, submit an application to be safe.
Other student loan forgiveness programs
While Biden’s student loan forgiveness program is the largest loan cancellation ever, there are other federal forgiveness opportunities you may qualify for. However, these programs typically have very narrow eligibility requirements and require years of repayment to qualify.
Public Service Loan Waivers (PSLF)
Under the PSLF program, borrowers who work full-time at a nonprofit organization or government agency can have their loans forgiven after making 120 qualifying payments. Not all federal loan types qualify, and you must be enrolled in an eligible income-driven repayment (IDR) plan to participate.
For more guidance, use Federal Student Aid’s PSLF assistance tool to find a qualified employer and confirm your eligibility.
Income-based repayment remission
There are several IDR plans offered by the Department of Education, each of which sets your loan payments at a percentage of your income. After you make payments for 20 or 25 years, depending on the plan, you can have your remaining loan amount forgiven.
Some of these plans require you to meet certain income requirements, but others are open to anyone with qualified federal student loan Forgiveness.
While IDR plans can lower your monthly payments, you pay more interest than a standard payment schedule because you’ve been in debt for at least 20 years. A federal student aid loan simulator can help you compare costs between different payment plans.
Teacher Loan Forgiveness
Teachers who work in low-income schools can have their federal student loan Forgiveness under the Teacher Loan Forgiveness Program. You must teach full-time in a low-income elementary or secondary school for five consecutive years to be eligible for up to $17,500 in loan forgiveness. Not all federal student loans are eligible for this program.
Loan Discharge Programs
Your federal student loans can be discharged or canceled under certain circumstances. For example, if your school closes, commits fraud, or you become permanently and severely disabled, you can have your federal student loans written off.
Public Service Loan Forgiveness Calculator FAQs
Does this calculator verify that I am eligible for PSLF?
No. While we would love to be able to do that with 100% certainty, there are a number of requirements for PSLF. Receiving results from this calculator does not mean you are eligible for a waiver from PSLF. In general, you must meet some key requirements for PSLF, including:
- Be employed full-time in an eligible job (nonprofit and government jobs are usually eligible)
- Pay for a loan or loans in the Direct Loan Program
- Make 120 qualifying payments after October 1, 2007
Again, there are a ton of requirements for the PSLF, so be sure to read it carefully.
If you believe you are eligible for PSLF, it is recommended that you submit an employment certificate for Public Service Loan Forgiveness. When you do this, the Department of Education will tell you if, in fact, you qualify and are making qualifying payments for PSLF.
What assumptions does the PSFL calculator make?
In order to provide an estimate of forgiveness for the PSLF calculator, we have to make some assumptions that may or may not hold true in every situation. The calculator makes the following assumptions:
- Your family size will remain the same over the life of the loan and the poverty guidelines will increase based on the Congressional Budget Office’s inflation projections.
- The current interest rate will not change during the life of the loan (even for loans with variable interest rates).
- All loans are unsubsidized loans for interest accrual purposes.
- You have not already made any eligible public service loan forgiveness payments.
- You are starting a 10-year standard payment plan today (for purposes of “standard plan” calculations).
Obviously, these assumptions will not be 100% accurate for all borrowers in all cases. That said, keep in mind that this tool is meant to estimate forgiveness through PSLF and does not provide an exact number.
How can I apply for waiver under PSLF?
Currently, there is no way to apply or register for forgiveness through PSLF. This is because the program did not begin until October 2007, so first borrowers will not be eligible for forgiveness for 10 years from this date (October 2017).
Instead, it is recommended for now that you submit an Employment Certificate for Public Service Loan Forgiveness to ensure you are on track for PSLF. Other than that, all you need to do now is make sure you meet all the requirements and continue to make qualifying payments for PSLF.
How does the process work and what are the companies you suggest?
You can check your rate without affecting your credit score. Moreover, it only takes a few minutes. I suggest checking with several companies because you never know who will show up with the best interest rates for refinancing your college expenses.
If you decide to go through with refinancing, your score will be affected temporarily. However, if you are cutting your interest rate by 1%-3% it is totally worth it. I even had a client once who lowered her rate from 13% to 3%. That result is unusual, but I see people all the time who save thousands in interest payments by refinancing their loans. If you have less than two times your income in debt, I recommend you check it out.
Want to check refinance interest rates? Check out these amazing refinancing bonuses available to Student Loan Forgiveness Planner® readers and customers. If you visit lender websites directly you will not find it at all. Furthermore, it does not affect the interest rate they offer. So you should definitely check it out.
Need help? Contact the planner
Wondering what Student Loan Forgiveness Planner® can do for you? The average savings I get over the loan payback period is over $80,000 per person.
In contrast, the consultation costs $595 for new customers and $495 for existing customers. Additionally, the savings I received varied widely, from $0 to over $300,000. The most common amount of savings I would probably find over 20-25 years is around $50,000. Please verify the information I am telling you. Check out what Student Loan Forgiveness Planner® clients are saying by reading our reviews.
Many borrowers will use this tool and never contact me for help, and I’m cool with that. If that’s you, please share it on social media and with your professional networks if you find it useful. If you have comments on the tool or want to learn more about how I help create student loan Forgiveness strategies, contact me directly.