What to know about how to prepare for federal student loan forgiveness

The University of Vermont's Old Mill in Burlington on Wednesday, July 28, 2021. Photo by Glenn Russell/VTDigger

Following President Joe Biden’s announcement in late August that student borrowers could be eligible for some amount of one-time student loan relief, a student loan forgiveness application is expected to go live this month.

According to the U.S. Department of Education, if borrowers made an individual income of less than $125,000 or $250,000 for a household in 2020 or 2021, federal Pell Grant recipients could receive up to $20,000 in debt relief and non-Pell Grant recipients up to $10,000.

Most recently, however, there has been discontent over a change in loan forgiveness eligibility.

On Sept. 29, the Biden administration quietly changed the eligibility of loan forgiveness to exclude borrowers with Federal Family Education Loans. The change affects roughly 800,000 borrowers, though it remains unclear how many Vermonters will now be excluded.

In Vermont, there are 77,000 federal student loan borrowers, with an average loan balance of $37,000. Fifteen percent of borrowers in the state have less than $5,000 in outstanding debt.

Borrowers are permitted to opt out of the student loan forgiveness program, which some might decide to do if they live in a state that would tax forgiven loans.

In an email to VTDigger in late August, state Tax Commissioner Craig Bolio said that, according to the Department of Taxes’ reading of the plan and current state law, forgiven loans will not be considered taxable income by the federal or state government due to provisions in the American Rescue Plan Act.

Borrowers can be notified when the application has opened by signing up at the Department of Education subscription page. The application will be live until Dec. 31, 2023.

To prepare for the application, borrowers can log into their account at to make sure their contact information is up to date.

The U.S. Department of Education is warning borrowers to be aware of potential scams. The department reminded borrowers that there is no fee to receive help with federal student aid and no borrower should give their information to any individual.

The department said that scams should be reported to the Federal Trade Commission at 1-877-382-4357 or by visiting

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Juliet Schulman-Hall

About Juliet

Juliet Schulman-Hall recently graduated from Smith College, majoring in English, minoring in sociology and concentrating in poetry. Most recently, she has worked for MassLive covering abortion and the environment, among other topics. Prior to that, she worked for Ms. Magazine and has done freelance work for PBS's Next Avenue and Arkansas Nonprofit News Network.


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