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  • Writer's pictureOpen Doors FP

Student Loan Forgiveness IS FINALLY HERE!!!!...Kind of…

When president Biden campaigned and took office, he made some astronomically large student debt elimination promises. While a lot of these were not economically feasible, the more likely promise that would be fulfilled was a forgiveness program to wipe out $10,000 across the board. Well, that promise is now being delivered, and below are the highlights of what that action actually looks like as of now:

- Do I qualify for forgiveness?

  • There are 2 different forgiveness tiers:

    • Up to $10,000 forgiven

      • If you are single on your tax return filing, your AGI (adjusted gross income) needs to be less than $125,000

      • If married filing jointly, AGI needs to be below $250,000

      • It must be a federal loan (not private)

    • Up to $20,000 forgiven

      • This includes the same as the $10,000 bullet above

      • AND, you received a Pell Grant while in school. If you are not certain, this is a grant given based on financial needs from the federal government.

- What tax year is my AGI based on?

  • According to the Tax Foundation, you can use your 2020 OR 2021 tax return depending on which one better serves your goals.[1]

- What else is in the new forgiveness act?

  • Student loan repayments will not start again until January 2023.

  • Improvements to the PSLF (Public Service Loan Forgiveness) rules will be made available.

  • Is this a taxable benefit? No, thankfully there will be no federal taxes for the forgiven amount.

    • However, you may still owe state taxes depending on your state and how they choose to handle forgiveness. This is not yet clear and be sure to check with your state or tax professional.

- What does “up to $10,000” mean?

  • Typically, this means that they pick 2 income levels, let’s say here as an example it is between $100,000 AGI, and $125,000 AGI. If your income fell halfway between these two figures ($112,500) you would get 50% of the benefit, or $5,000 in forgiveness. While the website does not expand to say this is how they will handle it, that is typically how it is handled.

  • If I have $8,000 in remaining student debt, and I am forgiven $10,000, do I keep the extra $2,000? No, you do not. That money goes back into the government loan forgiveness pot.

- What/who DOES NOT Qualify?

  • Private loans. Yes, if you refinanced your student loan at your local bank, you will not benefit from this.

  • You make above the $125,000 or $250,000 AGI mark. According to what’s been released by the White House, you will not qualify.

  • Considering the massive debt Veterinarians and medical professionals take on, you have my sincere apologies you were excluded from this act.

Also, some other promises were made about restructuring some repayment plans, but until it actually happens, I think it best to hold off on getting excited about those.

To sign up for updates on when you can apply, and any other new information on this topic follow this link ( and see below for instruction :

If you wish for additional information or assistance navigating how you can benefit from this, reach out at, or at our contact page to schedule a call.


Stu Sutphin, CFP®


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