Bottom line up-front: The Biden student loan forgiveness plan – first announced on August 24, 2022 – was struck down on June 30, 2023, and has not been revived or reinstated since then. The Supreme Court’s decision fully resolved the program's legality, permanently blocking its implementation absent new legislation from Congress.
More details, including what was originally announced on August 24, 2022, what's changed since then, and the status of other student loan relief efforts currently in effect, are covered in more detail in the article below.
On August 24, 2022, President Biden announced the forgiveness of between $10,000 and $20,000 of federal student loan debt. The President also announced the extension of the student loan pause for a fifth and final time through December 31, 2022.
The White House estimates that 43 million borrowers will benefit from the Administration's forgiveness plan and that more than 60% are Pell Grant recipients.
On June 30, 2023, the U.S. Supreme Court issued its decision in Biden v. Nebraska, striking down the Biden administration’s student debt relief plan. In a 6–3 ruling, the Court held that the Department of Education lacked the authority under the HEROES Act to implement the proposed mass loan cancellation, concluding that such sweeping relief required explicit congressional authorization.
The Court’s decision resolved two consolidated challenges to the plan, one brought by a group of Republican-led states and another initiated by individual borrowers alleging procedural violations. While the Court found that at least one state had standing to sue, it dismissed the borrower-led case on standing grounds without reaching its merits.
As a result of the ruling, the student debt relief program announced in August 2022 was invalidated and never took effect. The plan remains permanently blocked absent new legislation from Congress.
Roughly 26 million borrowers applied for student loan forgiveness. Prior to the ruling, the Department of Education (DOE) had approved 16 million of those applications, but relief was not granted due to the legal challenges.
In addition, the DOE stopped taking new applications on November 11, 2022, after a Texas court ruling halting the program. All application activity was ultimately rendered moot by the Supreme Court’s June 2023 decision.
Following the Supreme Court’s 2023 decision invalidating the mass student debt relief plan, the Department of Education shifted its focus to relief programs grounded in existing statutory authority. These include income‑driven repayment (IDR) forgiveness, Public Service Loan Forgiveness (PSLF), and targeted discharge programs for specific borrower populations. Unlike the 2022 plan, these efforts were not before the Supreme Court and continue to operate under long‑standing provisions of the Higher Education Act.
Courts have allowed the Department to continue granting loan cancellations under IDR and PSLF, which forgive remaining balances after borrowers meet prescribed repayment or service requirements. While litigation has periodically slowed implementation, particularly with respect to newer repayment plans, the underlying authority for these programs has repeatedly been upheld, and relief continues to be processed.
Separately, additional repayment reforms have been pursued through rulemaking, most notably the Saving on a Valuable Education (SAVE) plan. That initiative has faced ongoing legal challenges, resulting in pauses, partial injunctions, and administrative adjustments. These disputes concern the structure and terms of repayment plans rather than the legality of loan forgiveness itself, and do not affect previously granted discharges under IDR or PSLF.
Taken together, these relief efforts remain distinct from the invalidated 2022 debt cancellation plan and continue, at varying speeds, subject to ongoing litigation and administrative review rather than a single, comprehensive judicial bar.
To be eligible for student loan debt cancellation, borrowers must have income in the 2020 or 2021 tax year of less than $125,000 for individuals and less than $250,000 for married couples or heads of household. For the purposes of student loan debt cancellation, income is calculated as the borrower's adjusted gross income (AGI), as opposed to gross or taxable income.
Loans must have been taken out before June 30, 2022, to qualify for student loan forgiveness.
Federal Pell Grant recipients who meet the income requirements are eligible for up to $20,000 in student loan forgiveness, capped at the amount of their outstanding debt.
Other eligible borrowers (who meet the income threshold) can receive a maximum of $10,000 in forgiveness for loans held by the Department of Education, capped at the amount of the borrowers' outstanding debt.
Most federal student loans qualify for forgiveness, including Direct Subsidized and Unsubsidized Loans and Graduate and Parent PLUS Loans. In short, loans that qualified for the federal student loan payment pause should be eligible for forgiveness.
The Department of Education briefly explored options to extend forgiveness to certain non–federally held loans, but those efforts were abandoned once litigation commenced and were rendered moot by the Supreme Court’s 2023 ruling.
Student loans that were not included in the President's August 2022 forgiveness announcement include:
As discussed above, the Supreme Court’s June 30, 2023, decision foreclosed any further agency action related to the August 2022 forgiveness program absent new legislation.
The DOE indicates that roughly 8 million borrowers whose income is already on file at the department will have their loans automatically forgiven without having to apply.
Borrowers without income information on file would have been required to apply via an online form. While an application process was briefly opened in fall 2022, it was suspended due to litigation and ultimately rendered moot following the Supreme Court’s decision. No forgiveness was issued under this program.
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Although the federal tax code generally treats forgiven debt as taxable income, the American Rescue Plan Act, signed by President Biden in 2021, includes a provision exempting canceled student debt from taxation through 2025. As a result, student loan amounts forgiven under qualifying federal programs between 2021 and 2025 are excluded from gross income for federal tax purposes.
However, because the August 2022 mass student loan forgiveness program was invalidated by the Supreme Court and never took effect, no federal tax consequences arose from that specific plan. The ARPA exclusion remains relevant for other student loan forgiveness and discharge programs that are lawfully implemented during the covered period.
As of this writing, state tax treatment of forgiven student loan debt varies, as not all states automatically conform to the federal tax code or the ARPA exclusion provisions. At the time of the 2022 announcement, several states had not adopted full conformity, including:
Residents in these states could have been subject to state income tax on forgiven student loan debt if forgiveness had occurred and absent corrective legislative or administrative action.
Because the August 2022 forgiveness program was never implemented, no taxable forgiveness was reported at the state level under that program. State tax implications continue to depend on the specific forgiveness program involved and each state’s conformity rules.
Of note, New York State completed the process of state conformity independent of the ARPA conformance procedure. Forgiven student loan debt is not treated as taxable income under New York law, meaning that amounts forgiven under qualifying federal student loan forgiveness or discharge programs are excluded from New York State income tax.
The student aid website previously included the following frequently asked questions related to the August 2022 student loan forgiveness plan. These FAQs are presented below for historical context only, as the program was invalidated and did not take effect.
To be eligible, a borrower’s annual income must have fallen below $125,000 for individuals or $250,000 for married couples or heads of household, based on 2020 or 2021 tax data.
Borrowers who received a Pell Grant in college and met the income threshold would have been eligible for up to $20,000 in debt cancellation.
Borrowers who did not receive a Pell Grant and met the income threshold would have been eligible for up to $10,000 in debt cancellation.
Relief would have been capped at the amount of your outstanding debt.
For example: If a borrower qualified for $20,000 in debt relief, but have a balance of $15,000 remaining, forgiveness would have been limited to $15,000.
Nearly 8 million borrowers were expected to receive relief automatically because relevant income data was already available to the U.S. Department of Education.
For borrowers whose income information was not already on file, the Department of Education briefly launched an online application in fall 2022. The application process was suspended shortly thereafter due to litigation and ultimately rendered moot by the Supreme Court’s June 2023 decision.
No forgiveness was issued under this program, regardless of application status or timing.
The Public Service Loan Forgiveness (PSLF) program forgives the remaining balance on eligible federal student loans after a borrower makes 120 qualifying payments working full-time for federal, state, Tribal, or local government; military; or a qualifying non-profit.
Temporary changes to the PSLF program, which expired on October 31, 2022, allowed borrowers to receive credit for certain past repayment periods that would not have otherwise qualified. Loan forgiveness granted under PSLF remains in effect and was not impacted by the Supreme Court’s ruling on the 2022 mass forgiveness plan.
The Supreme Court issued its decision on June 30, 2023, conclusively resolving the legal status of the August 2022 student loan forgiveness plan.
The Court’s ruling invalidated the program in its entirety, permanently preventing its implementation absent new congressional legislation.
While the 2022 mass forgiveness initiative is no longer legally viable, other student loan relief mechanisms, including IDR forgiveness, PSLF, and targeted loan discharge programs, continue to operate under existing law, albeit subject to administrative capacity and ongoing litigation concerning repayment plan design. These programs continue to have meaningful financial implications for borrowers and remain a central focus of federal student loan policy.
A version of this article was originally published on Accounting Today in 2022.
