• Biden canceled up to $20,000 in student debt for federal borrowers and Pell Grant recipients.
  • While relief could be automatic for 8 million borrowers, others will have to apply.
  • Here's what you need to know right now about getting the loan forgiveness.

Wednesday was a big day for millions of federal student-loan borrowers — long-awaited relief is finally on the way to their debt balances.

But while forgiveness might be automatic for some, many will still have to take action to take advantage of President Joe Biden's student-debt cancellation.

Biden and the Education Department announced up to $20,000 in student-loan forgiveness for Pell Grant recipients, and other federal borrowers that do not receive Pell grants will be eligible for up to $10,000 in debt relief. Both of those groups must make under $125,000 a year to qualify. This announcement was coupled with Biden's fifth extension of the student-loan payment pause through December 31. The president affirmed this is the "final" extension, and borrowers should anticipate restarting payments come January.

"There is an entire generation now saddled with unsustainable student loan debt in exchange for a college degree," Biden said. "We're making incredible progress bringing relief to those that need it and fixing the student loan system so it works for working people."

But the department made clear that loan forgiveness will not reach all borrowers in the same way. Here's what we know so far about getting that relief, and what you should do next.

First — are you eligible?

Before determining how to get student-loan forgiveness, see if you qualify:

  • Your annual income is below $125,000, or $250,000 for married couples
  • If you received a Pell Grant in college and make under $125,000 a year, you could get up to $20,000 in relief
  • If you have federal loans (not Pell) and make under $125,000 a year,  you could get up to $10,000 in relief
  • Your loans were taken out prior to June 30, 2022.

I'm eligible — how do I get the student-loan forgiveness?

While the Education Department will release more details on the process in the coming weeks, here's what you should know right now:

  • Approximately 8 million student-loan borrowers could be eligible to automatically receive relief because their income information is readily available to the department. Those borrowers will likely be notified of their eligibility.
  • If the department does not have your income information, you will have to apply. The department will launch a "simple application" in which borrowers can self-certify their income via the studentaid.gov website. In terms of timing, the department said the application will be available before the student-loan payment pause ends on December 31. 
  • To be notified when the application is live, you can sign up here. 

This story will be updated as more information becomes available.

Read the original article on Business Insider