On August 24, President Joe Biden announced broad student loan relief actions, forgiving up to $20,000 in federal student loan debt for eligible borrowers. While the much-needed relief has been celebrated by many, it’s left others —especially married couples— somewhat in the dark. Here’s what married couples need to know about student loan forgiveness:
To qualify, there are a variety of eligibility criteria you’ll need to meet, including earning below a specific income limit. However, if you are married and filed taxes jointly, you’ll be subject to different income criteria, which could leave you ineligible for forgiveness. Learn more about the student loan eligibility requirements for married couples:
Eligibility Criteria for Biden’s Student Loan Forgiveness Plan
To qualify for Biden’s student loan relief, you’ll need to meet the following requirements:
(1) You must have federal student loans disbursed on or before June 30, 2022.
Most federal student loans qualify, such as Direct Loans and Parent PLUS Loans. It is currently unclear whether Federal Family Education Loans (FFEL) will qualify.
>> MORE: Parent PLUS loan forgiveness
(2) You must make less than $125,000 per year, if single. Couples who file taxes jointly must earn less than $250,000 per year, combined.
Heads of households who earn less than $250,000 per year are also eligible.
If you meet the above criteria, but did not receive a Pell Grant while in school, you are eligible for $10,000 in student loan forgiveness. If you did receive a Pell Grant, you are eligible for $20,000 in student loan forgiveness.
>> MORE: Student loan eligibility requirements: Private vs Federal loans
What Biden’s Student Loan Forgiveness Means for Married Couples
If you and your spouse filed taxes jointly, you’ll need to have made less than $250,000 combined to qualify for student loan forgiveness. If your combined income was above that threshold, neither of you will be eligible.
Your 2020 and 2021 tax returns will be used as proof of income. If you filed jointly in either of those years, and your combined income was above the threshold, you may not be eligible.
However, if you are married but did not file jointly in 2020 or 2021, your eligibility for relief will be evaluated based on your income alone.
Will Both Spouses Be Eligible?
If you filed jointly, both spouses will be eligible in cases where your combined income is less than $250,000 per year. If you are married, but did not file jointly, both spouses will be eligible in cases where your individual income is less than $125,000 per year.
Common Scenarios
Here are a few scenarios to illustrate how this will work:
Scenario 1:
Sarah and John are married and filed a joint tax return in 2021. Together, they make a combined income of $300,000. John earns $200,000 per year, and Sarah earns $100,000 per year. Sarah has federal student loan debt, while John does not.
While Sarah makes below the $125,000 individual income threshold, their combined income makes Sarah ineligible for student loan forgiveness.
Scenario 2:
Kate and Jane are married and filed taxes jointly in 2021. Together, they make a combined income of $280,000. Kate brings in $110,000 per year, while Jane brings in $170,000 per year. Both Kate and Jane have federal student loan debt.
While Kate is below the individual income threshold, because they filed jointly, Kate is ineligible for student loan forgiveness.
Scenario 3:
Luke and Miranda are married and filed taxes jointly in 2020. Together, they earn $80,000 total, with Luke bringing in $35,000 and Miranda bringing in $45,000. Both Luke and Miranda have federal student loan debt.
Because their combined income is below the income threshold for married couples, both Luke and Miranda are eligible for student loan forgiveness.
Scenario 4:
Bryce and Joe are married but did not file a joint return in 2020 or 2021. Bryce earns $110,000 per year, and Joe earns $127,000 per year. Both have federal student loan debt, however, only Bryce is eligible for student loan forgiveness as Joe’s income is above the individual income threshold.
Can I File Separately to Be Eligible for Forgiveness?
Unfortunately, you cannot retroactively file separately after filing jointly. While you can amend prior tax returns to change from married filing separate to married filing joint, you cannot do the opposite.
So, in this case, if you previously filed taxes jointly, you cannot change it. This may include instances of divorce, where you previously filed jointly in 2020 or 2021 with a now ex-spouse. However, it’s best to contact Federal Student Aid representatives directly for more information, as divorce is a special circumstance.
How to Prepare for Biden’s Student Loan Forgiveness
While the application for student loan relief has not yet been released, you can begin the process by collecting the documentation you’ll need to apply, such as:
- Proof of income, such as previous tax returns;
- Accurate address information;
- And, loan records.
You may also want to take a screenshot of your current federal loan balance prior to forgiveness. Then, after the forgiveness is said to have taken place, you can verify the amount to ensure the proper portion was forgiven.
What to Do If You Don’t Qualify for Biden’s Student Loan Relief
While President Biden’s plan, particularly the income level requirements, are intended to help families most in need of relief, it can be frustrating if you don’t qualify.
If the income requirements for married couples leaves you ineligible for student loan forgiveness, there are a few other relief options to consider:
Other Forgiveness Programs
While you may not qualify for this forgiveness program, there are others such as Public Service Loan Forgiveness, Teacher Loan Forgiveness, and Income-Driven Repayment Loan Forgiveness that you may qualify for.
Federal Direct Consolidation
If managing multiple loan payments is challenging, consolidating may help you. Direct Consolidation loans allow you to combine multiple federal loans into one, leading to one interest rate and one payment, as opposed to several. While only available for federal student loans, consolidation can simplify your payments.
Private Student Loan Refinancing
If your interest rate is of concern, refinancing with a private lender may be your best option. Be sure to weigh the pros and cons of refinancing federal student loans before doing so. If you’re interested, compare refinance rates across multiple lenders today.
>> MORE: Best student loan refinance rates
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Final Thoughts from the Nest
Due to the unprecedented nature of Biden’s sweeping student loan relief, many details are still unclear, particularly as it pertains to married couples. However, in leading up to the application release, more information is sure to arrive.
To receive updates on any changes to the program, sign up for the U.S. Department of Education’s email updates.