Student Loan Debt Forgiveness: Controversial and Complicated

September 22, 2022by Jon Dockery0

I’m sure you’ve had a conversation on the Biden administration’s recent plan to forgive a portion of student loan debt. You have people who are convinced it’s the right thing to do, people upset that they paid their debt back with no assistance, and people convinced it will be the downfall of our nation. Regardless of your opinion, we know there is a great divide on the topic, even when there is still a lot of uncertainty as to how it will actually work and impact our country.

A recent study by the CATO Institute produced interesting results when comparing the basic idea of student loan forgiveness versus student loan forgiveness when considering it’s possible trade-offs. Some of the interesting results are:

  • 64% of Americans support the federal government forgiving up to $10,000 in student loans, but
  • 64% of Americans oppose the cancellation of debt if it is going to raise their taxes, and
  • 76% opposed the cancellation if it was going to cause universities to raise tuition

Of course, there is also a distinct difference in how Republicans and Democrats responded to the survey. For example, Democrats overwhelmingly supported loan forgiveness (88%), while Republicans (37%) and Independents (58%) were much lower.

Regardless of how you feel about the plan, we know there will be a lot of people impacted, and you need to know how to handle the forgiveness if it applies to you. The White House released an analysis of the number of people benefitting per state, and Tennessee is estimated to have over 795,000 people eligible.

While it is still early, and steps in a major plan like this often change, the administration has released some major points to assist in our planning:


  • Up to $10,000 of forgiveness for borrowers with income below $125,000 for single and $250,000 for married. “Income” is currently undefined, but general Adjusted Gross Income (AGI) is used
  • Up to $20,000, if the borrower was a Pell Grant recipient

Types of loans

  • Federal Loans funded by June 30, 2022 will qualify
  • Privately held loans do not qualify for forgiveness currently
  • Consolidation into a Federal loan could be an option that qualifies your loan


  • Possible automatic qualification for those with income information on file
  • A promised “simple” application for those that don’t automatically qualify


  • Currently, through 2025, this forgiveness should be tax-free at the Federal level
  • State Taxation will depend on your state of residence

As the final details come out on the forgiveness process, it will be important to have an advisor that can walk you through the steps. We would appreciate the opportunity to be that advisor.

Jon Dockery

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