Biden Cancels $20,000 of Student Loans in Historic Student Loan Relief

By Mentor Staff | Edited By Mentor Staff

Updated On September 22, 2022

Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.

How do we make money? The products featured on this website are from our partners who compensate us. This may impact which companies we review, the products we evaluate, and where and how a product appears on a page. We receive compensation from a partner when you apply for and receive a product through Mentor. This helps us to support our website, offer free content, tools and calculators, and continue to be one of the leading sources on personal finance.

President Joe Biden cancels $20,000 of student loans for millions of student loan borrowers. Here’s what you should know about this historic student loan relief.

In this article, you will learn:

Top Picks For Student Loan Refinancing

October 2022

Variable APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Variable APR means that your interest rate can fluctuate over time, which can increase or decrease your monthly student loan payment. Typically, a variable-rate loan has a lower introductory rate than a fixed-loan rate loan. Variable APR includes a 0.25% discount when you enroll in autopay.
Fixed APR ?APR, or Annual Percentage Rate, is the price you pay to borrow money. Fixed APR means that your interest rate will always stay the same. Even if interest rates change, your interest rate or monthly payment will not. Fixed APR includes a 0.25% discount when you enroll in autopay.
APR
3.40% - 8.40%
3.99% - 8.24%
3.40% - 8.40%

View Details

on SoFi's website

Overview

Variable APR:
3.40% - 8.40%
Fixed APR:
3.99% - 8.24%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
2.49% - 7.99%
3.74% - 8.49%
2.49% - 8.49%

View Details

on Earnest's website

Overview

Variable APR:
2.49% - 7.99%
Fixed APR:
3.74% - 8.49%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except NV
Hardship Deferment:
Yes
Co-signer Option:
No
2.49% - 7.99%
3.74% - 8.49%
2.49% - 8.49%

View Details

on NaviRefi's website

Overview

Variable APR:
2.49% - 7.99%
Fixed APR:
3.74% - 8.49%
Minimum Credit Score:
650
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,001 ($10,001 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5-20 years
Borrower Residency:
All States except NV
Hardship Deferment:
Yes
Co-signer Option:
No
2.48% - 7.24%
4.29% - 7.29%
2.48% - 7.29%

View Details

on ELFI's website

Overview

Variable APR:
2.48% - 7.24%
Fixed APR:
4.29% - 7.29%
Minimum Credit Score:
680
Minimum Income:
$35,000
Fees:
None
Minimum Loan Amount:
$10,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
2.49% - 11.72%
2.59% - 8.74%
2.49% - 11.72%

View Details

on Splash's website

Overview

Variable APR:
2.49% - 11.72%
Fixed APR:
2.59% - 8.74%
Minimum Credit Score:
640
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5 – 25 years
Borrower Residency:
All states
Hardship Deferment:
Varies
Co-signer Option:
No
3.84% - 10.07%
4.49% - 10.11%
3.84% - 10.11%

View Details

on Citizens' website

Overview

Variable APR:
3.84% - 10.07%
Fixed APR:
4.49% - 10.11%
Minimum Credit Score:
Not disclosed
Minimum Income:
$24,000
Fees:
No prepayment or origination fees
Minimum Loan Amount:
$10,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states
Hardship Deferment:
Yes
Co-signer Option:
Yes
2.50% - 6.30%
3.99% - 6.40%
2.50% - 6.40%

View Details

on Laurel Road's website

Overview

Variable APR:
2.50% - 6.30%
Fixed APR:
3.99% - 6.40%
Minimum Credit Score:
660
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All States
Hardship Deferment:
Yes
Co-signer Option:
Yes
4.13% - 7.39%
2.99% - 9.93%
2.99% - 9.93%

View Details

on LendKey's website

Overview

Variable APR:
4.13% - 7.39%
Fixed APR:
2.99% - 9.93%
Minimum Credit Score:
680
Minimum Income:
$24,000
Fees:
None
Minimum Loan Amount:
$5,000

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except ME, ND, NV, RI, WV
Hardship Deferment:
Yes
Co-signer Option:
Yes
-
3.94% - 9.08%
3.94% - 9.08%

View Details

on ISL's website

Overview

Variable APR:
-
Fixed APR:
3.94% - 9.08%
Minimum Credit Score:
670
Minimum Income:
None
Fees:
None
Minimum Loan Amount:
$5,000 ($10,000 in CA)

Details

Eligible Loans:
Private & Federal
Eligible Degrees:
Undergraduate & Graduate
Loan Terms:
5, 7, 10, 15, 20 years
Borrower Residency:
All states, except OR and ME
Hardship Deferment:
Yes
Co-signer Option:
Yes

Biden cancels $20,000 of student loans

Biden announced up to $20,000 of wide-scale student loan forgiveness for millions of student loan borrowers. This announcement will eliminate all federal student loans for approximately 20 million student loan borrowers. Student loan borrowers have been waiting years for Biden to announce his decision on broad student loan forgiveness. Here are the key details.

(Learn more: How to pay off student loans)

Student loan forgiveness: $10,000 of student loan cancellation

Biden’s new student loan plan includes $10,000 of student loan forgiveness for all eligible federal student loan borrowers who didn’t receive a Pell Grant in college. Student loan borrowers who received a Pell Grant in college will get up to $20,000 in student loan forgiveness. According to the White House, Pell Grant recipients generally have household incomes under $60,000 a year.

Biden has supported $10,000 of student loan forgiveness for borrowers since he was a presidential candidate during the 2020 election. The president has called on Congress to pass legislation to cancel student loans, but Congress never acted. Instead, Biden used his executive authority under the HEROES Act of 2003 to cancel student loans as part of the Covid-19 emergency.

Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) want Biden to cancel $50,000 of student loans. While they support Biden’s new student loan plan, they may continue to push Biden to cancel more student debt. However, Biden has publicly said he doesn’t support $50,000 of student loan forgiveness.

(Read: The Ultimate Guide To Student Loan Forgiveness)

Student loan cancellation: how to qualify

To qualify for this student loan cancellation, student loan borrowers will need to meet the following qualifications:

  • You must be a student loan borrower with a federal student loan that is owned by the U.S. Department of Education; and
  • You earned up to $125,000 of annual income (or $250,000 as a married or joint filer) during the Covid-19 pandemic.

Make sure that your federal student loan is owned by the federal government. For example, most FFELP Loans and Perkins Loans are owned by third party investors, financial institution and colleges and universities.

(Learn more: How to pay off $100,000 of student loans)

Student loan forgiveness: next steps

What are your next steps? First, logon to Federal Student Aid using your FSA ID. Determine how much federal student loan debt you hold. Private student loans are ineligible for Biden student loan forgiveness. Second, if the U.S. Department of Education already has your income information, then student loan forgiveness could be automatic. If you haven’t provided income information to the Education Department, then you should be able to apply online once a link is available. Third, if all your federal student loans aren’t canceled, then you should evaluate all your options to pay off student loans faster. This includes student loan refinancing, income-driven repayment and other options for student loan forgiveness.

Let's mentor your money

Get the latest personal finance advice delivered directly to your inbox.