Student loan forgiveness applications could open within weeks. Take these 4 steps now to get ready

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HOUSTON, TEXAS – AUGUST 29: Students study in the Rice University Library on August 29, 2022 in Houston, Texas.
Brandon Bell | Getty Images News | Getty Images

The U.S. Department of Education could have its application for student loan forgiveness up and running as soon as within the next few weeks.

Borrowers may start to see their balances reduced or eliminated by the end of the year, according to a department spokesperson.

Here’s how to prepare so that you’re ready for the jubilee.

1. Make sure you qualify based on income

President Joe Biden announced last week that most federal student loan borrowers will be eligible for some forgiveness: up to $10,000 if you didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if you did.

The relief will be limited to borrowers who make less than $125,000 per year, or married couples or heads of households earning less than $250,000.

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How to figure out if you qualify for student loan forgiveness

Review your recent tax returns to confirm your income fell below those thresholds. The Education Department will be considering people’s so-called adjusted gross income, or AGI, which may be different than your gross salary.

To confirm your AGI for 2020 and 2021, look for line 11 on the front page of your tax return, known as Form 1040

2. Ensure your loans qualify

The vast majority — roughly 37 million borrowers — will be eligible for the forgiveness based on their loan type because their debt is under what’s called the William D. Ford Federal Direct Loan Program. That group includes Direct Stafford Loans, and all Direct subsidized and unsubsidized federal student loans. Under the Direct program, Parent Plus and Grad Loans, are also eligible for the relief.

If you’re one of the 5 million borrowers with a commercially held Federal Family Education Loan (FFEL), your debt is actually held with a private company and not the government. To make sure you’re included in forgiveness sooner rather than later, you may want to consolidate your loan into the Direct Loan Program.

If you don’t want to consolidate your loans, however, the Education Department says it will work in the coming months with private lenders to make sure FFEL borrowers still benefit from forgiveness.

You can check your loan type at and sign in with their FSA ID. Then, go to the “My Aid” tab.

3. Gather records

It’s not yet entirely clear what the application for student loan forgiveness will look like, but it’s a good idea to have all relevant records at the ready proving that you qualify, experts say.

Around 8 million borrowers who’ve been enrolled in income-driven repayment plans may not have to attest their income because the government already has their data.

For everyone else, it may help to hang on to those tax returns you dug out for step No. 1, and print your loan records from step No. 2.

When you log into, the grants tab lets you look up if you received a Pell Grant in your undergraduate years and are eligible for the $20,000 in relief. If you received a Pell Grant, take a screenshot or print out the document confirming that fact.

Also, print a screenshot of your current student loan balance so you can later check that your debt dropped by the correct amount.

4. Stay up to date with the process

Borrowers can sign up now on the Education Department’s website for updates on the student loan forgiveness process, including when the application will be ready.

A spokesperson for the U.S. Department of Education says it could take around eight weeks after it has all the necessary information from a borrower until their debt is discharged.

The deadline to submit an application for forgiveness will be Dec. 31, 2023.

 – CNBC’s Kate Dore contributed reporting.

Sophie Tremblay

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