INSIGHTi

The Biden Administration’s One-Time
Student Loan Debt Relief Policy
Updated November 15, 2022
On August 24, 2022, invoking the HEROES Act of 2003, the Department of Education (ED) announced a
new “one-time student loan debt relief” policy (hereinafter, “the policy”) “to address the financial harms
of the pandemic for low- and middle-income borrowers” that is to make available up to $20,000 of loan
cancellation benefits per individual to millions of federal student loan borrowers. On October 21, 2022,
the U.S. Court of Appeals for the Eighth Circuit (hereinafter, the “Eighth Circuit”) issued an
administrative stay prohibiting ED from discharging student loans under the policy until the court ruled
on certain plaintiffs’ motion for an injunction pending appeal. On November 14, 2022, the Eighth Circuit
subsequently issued an injunction prohibiting ED from discharging loans under the policy pending appeal.
In another case, on November 10, 2022, the U.S. District Court for the Northern District of Texas vacated
the policy on the grounds that the policy is not authorized under the HEROES Act.
The policy 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, but could ultimately provide relief to more. The
Administration’s new policy is broader in scope and is to be available to millions of borrowers based on
limited eligibility criteria.
The Policy
Approximately 45 million borrowers owe over $1.6 trillion in federal student loan debt. Under the
cancelation policy, the Biden Administration plans to cancel:
 up to $10,000 in student loans for borrowers whose adjusted gross income (AGI) in 2020
or 2021 was less than $125,000 (for individuals or married borrowers who file their
federal income taxes separately), or $250,000 (for married couples filing jointly, heads of
households, or qualifying widow(er)s); borrowers enrolled in postsecondary education as
dependent students between July 1, 2021, and June 30, 2022, will be eligible for
cancellation based on parental AGI; and
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 an additional $10,000, for a total of up to $20,000, in student loans for borrowers who
meet the above criteria and received at least one Pell Grant in any amount at any point.
A borrower’s cancellation benefit is to be capped at the amount of their outstanding debt. Borrowers who
made voluntary payments on their loans during the COVID-19 payment pause and qualify for debt relief
may automatically receive refunds of those payments in limited circumstances.
Cancellation benefits are to be available for ED-held loans and defaulted Federal Family Education Loan
(FFEL) program loans held by a guaranty agency. ED-held loans include those loans made under the
Direct Loan program and those made under the FFEL or Perkins Loan programs that have been
transferred to ED. For the Direct Loan and FFEL programs, Subsidized Loans, Unsubsidized Loans,
PLUS Loans made to graduate students or parents of dependent undergraduate students, and
Consolidation Loans are eligible. To be eligible for cancelation, loans must have been disbursed on or
before June 30, 2022. For Consolidation Loans, only the underlying loans that were repaid by the
Consolidation Loan must have been disbursed on or before June 30, 2022. Direct Consolidation Loans
comprising any FFEL or Perkins Loan program loans not held by ED are eligible for debt relief if the
borrower applied for consolidation before September 29, 2022. Borrowers with qualifying loans in any
status (e.g., in school, repayment, default) may qualify for the cancellation benefit if they meet the income
requirements.
For borrowers with multiple qualifying loans, ED has developed the order in which it would apply the
cancellation benefit. Generally, benefits are to be applied first to defaulted loans and then to non-defaulted
loans, with ED making allowances for whether a borrower has multiple defaulted or non-defaulted loans
and taking into consideration the specific program (e.g., Direct Loan program) under which the loans
were made. If a borrower has multiple loans within a program, ED would apply the benefits considering
the loans’ interest rates (e.g., apply benefits to higher interest rate loans first), subsidy status (e.g., apply
benefits to unsubsidized loans first), date of disbursement, and outstanding balance.
For borrowers with remaining loan balances after the cancellation benefit is applied, ED announced plans
to recalculate their monthly payment based on their new balance, which may reduce borrowers’ monthly
payments.
How Borrowers May Receive Benefits
ED estimates that nearly 8 million borrowers are eligible to receive the benefit automatically, based on
relevant income data already available to ED. Such borrowers need not take any action and are to be
informed by ED of the debt relief they are to receive; borrowers may opt out of receiving the automatic
debt relief. For borrowers for whom ED does not have relevant income data, ED launched an online
application. In light of the Eighth Circuit’s stay, from October 21, 2022, to November 10, 2022, ED was
accepting and processing applications but was unable to discharge loans. Since November 10, 2022, and
in light of the U.S. District Court for the Northern District of Texas’s judgment, ED has stopped accepting
applications. ED intends to retain the applications received prior to the judgment. Currently, ED has not
cancelled any borrower’s student loan under the policy.
Borrowers Potentially Benefitting from Cancelation
The Biden Administration estimates that
 over 40 million borrowers are eligible for some amount of 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.

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The Administration has also released analyses of the characteristics of borrowers who may receive relief
under the policy by age and income and by state.

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
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.
CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United
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IN11997 · VERSION 6 · UPDATED

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