Student Loan Forgiveness

Group of five students in graduation cap and gown with arms around each other, smiling.

President Biden has announced a 3-part plan to help with student loans: 

  • Forgive a loan amount from the Department of Education 
  • Up to $20,000 forgiven for Pell Grant recipients, and up to $10,000 for non-Pell Grant recipients 
  • Make loan payments more manageable 
  • Monthly payments will be cut in half for undergraduate loans, with a maximum amount of 5% of someone’s discretionary income 
  • The Public Service Loan Forgiveness Program will be updated so that more people working in nonprofit agencies, in the military, or in federal, state, tribal, or local government will get credit towards loan forgiveness 
  • Protect future students by reducing college cost  
  • Pell grants will be increased and colleges will be held accountable for rate hikes 

Current student loan payments have been on pause since the beginning of the COVID pandemic. The pause has been extended to June 2023. 

Am I eligible for student loan forgiveness?  

You are eligible if your income is less than $125,000 (or less than $250,000 for married couples). Note that only loans from the Department of Education are eligible. Private student loans are not eligible for forgiveness. 

If your student loans are guaranteed by the government but held by private lenders, you are currently excluded from loan forgiveness. Many of these types of loans were made under the former Federal Family Education Loan program and Federal Perkins Loan program. 

How can I apply for student loan forgiveness?  

Student loan debt relief is currently blocked by the court and applications are not being accepted. The Biden administration is seeking to overturn the block. The case went before the Supreme Court in February and justices are still considering the case and have not made a final decision. If there is still no decision by the end of June, student loan payments will resume at the end of August 2023. 

People who have already applied have had their applications put on hold and won’t need to apply again. 

Does my loan forgiveness count as income at tax time?  

The amount forgiven will count as income for NC taxes, but not for federal taxes. NC is one of 5 states that is taxing the forgiveness as income. 

If I paid off my loan during the pandemic, am I eligible for a refund? 

If you paid down your debt during a pandemic freeze that started in March 2020, you can get a refund and then apply for loan forgiveness. The refund will be automatic if your payments brought your loan balance below the debt relief amount ($10,000 for all borrowers, and $20,000 for Pell Grant recipients).  

For example, if you paid $100 a month for 10 months of the pandemic and your balance is now $8,000, that $1,000 will automatically be refunded. Then you can apply to get the rest of your debt forgiven. But if you paid throughout the pandemic and still owe $14,000, you won’t get an automatic refund. You can, however, apply to have $10,000 of that debt erased. 

Another group of people that have to apply for a refund are those who completely paid off their loan balance during the pandemic. For example, if you had $5,000 in debt at the start of the pandemic and paid it all back during the freeze, but are eligible for up to $10,000 in forgiveness, you would apply for a $5,000 refund, then apply to have your debt forgiven. 

How do I apply for a refund? 

If you want a specific amount refunded, you can apply by calling your loan service provider. Right now, refunds are only being done via phone and not through any website or email. Here are some of the most common phone numbers: 

  • FedLoan Servicing: 800-699-2908 
  • Great Lakes Educational Loan Services: 800-236-4300 
  • Edfinancial: 855-337-6884 
  • MOHELA: 888-866-4352 
  • Aidvantage: 800-722-1300 
  • Nelnet: 888-486-4722 
  • OSLA Servicing: 866-264-9762 
  • ECSI: 866-313-3797 
  • Default Resolution Group: 800-621-3115 ( TTY: 877-825-9923) 

If you don’t know your loan service provider, you can call the Federal Student Aid office at 800-433-3243. 

What are the changes to the Public Service Loan Forgiveness program? 

The Public Service Loan Forgiveness program (PSLF) student forgives the loans of people who have served at a non-profit, in the military, or in federal, state, Tribal, or local government for at least 10 years. Those who have served less than 10 years may now more easily get credit for their service to date toward eventual forgiveness.  

President Biden is making it easier for people to apply for the program and have partial payments count towards the 10-year requirement. There will also be forbearances allowed now for Peace Corps, AmeriCorps, National Guard members, and people in the military. 

People needed to apply by October 31, 2022 for PSLF. Visit for more information. 

Need more information?  

Call 2-1-1 or 1-888-892-1162 to speak with a trained call specialist, available 24/7/365. 

Source: and 

Last Updated 4/10/2023

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