INSIGHTi

The Administration’s New Announced
Student Loan Debt Cancellation Policy
August 26, 2022
On August 24, 2022, the U.S. Department of Education (ED) announced a new student loan cancellation
policy “to address the financial harms of the pandemic for low- and middle-income borrowers” that is to
make available to millions of qualifying federal student loan borrowers up to $20,000 of loan cancellation
benefits per borrower. This action represents a departure from other types of student loan debt relief,
which historically have been available to borrowers on a more targeted basis and typically provide relief
to individuals for fulfilling employment requirements, for repaying their loans according to an income-
driven repayment plan, or following borrower hardships (e.g., total and permanent disability). These
programs, to date, have provided relief to hundreds of thousands of borrowers, although they could
ultimately provide relief to higher numbers of borrowers. The Administration’s new policy is broader in
scope and would be available to tens of millions of borrowers based on limited eligibility criteria. This
Insight summarizes the recently announced student loan cancellation policy and considerations for
Congress as the policy is effectuated.
ED’s Recently Announced Student Loan Cancellation Policy
Federal student loan debt exceeds $1.6 trillion and is owed by approximately 45 million borrowers. On
August 24, 2022, ED announced a new student loan cancellation policy that it estimates will provide
some amount of loan cancellation for most borrowers, including total debt cancellation for about 20
million borrowers.
The administration plans to cancel the following:
 up to $10,000 in student loans for borrowers whose annual income in 2020 or 2021 was
less than $125,000 for individuals, or $250,000 for married couples or heads of
households; current dependent students will be eligible for cancellation based on parental
income, rather than their own income; and
 an additional $10,000, for a total of up to $20,000, in student loans for borrowers who
meet the above criteria and received a Pell Grant at any point.
Congressional Research Service
https://crsreports.congress.gov
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CRS INSIGHT
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A borrower’s cancellation benefit is to be capped at the amount of their outstanding debt. Thus, if an
individual is eligible for $20,000 in cancellation benefits but has an outstanding balance of $15,000, they
would receive $15,000 in cancellation benefits.
Cancellation benefits are to be available to individuals with ED-held loans. ED-held loans include those
loans made under the Direct Loan program and those made under the Federal Family Education Loan
program or the Perkins Loan program that have been transferred to ED, and loans must have been
disbursed before July 1, 2022.
ED estimates that nearly 8 million student loan borrowers may be eligible to receive loan cancellation
automatically, based on relevant income data already available to ED. For those borrowers for whom ED
does not have relevant income data, ED stated it will announce additional details on how borrowers may
claim loan cancellation relief “in the weeks ahead” and launch an application for such borrowers before
December 31, 2022.
Potential Impacts on Borrowers
In announcing the new student loan cancellation policy, the Administration estimated that
 up to 43 million borrowers would receive some relief under the policy;
 about 27 million student loan borrowers will be eligible to receive up to $20,000 in
cancellation benefits; and
 about 20 million borrowers would have the full balance of their loans cancelled.
In addition, the Administration provided an analysis of characteristics of borrowers who may receive
relief under the policy, which included the following:
 of eligible borrowers, 21% are 25 years old and under, 44% are ages 26-39, and more
than one-third are ages 40 and up, including 5% who are senior citizens;
 only individuals earning in the bottom 95% of incomes in the United States (i.e., not
earning in the top 5% of incomes) will receive loan cancellation benefits;
 87% of loan cancellation benefits (in terms of dollar amount cancelled) will go to
individuals earning less than $75,000 annually.


Author Information

Alexandra Hegji

Analyst in Social Policy




Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff
to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of

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Congressional Research Service
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Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of
information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role.
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