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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

$10,000 in Student Loan Forgiveness Could Cancel Federal Debt for 1 in 3 Borrowers

Updated on:
Content was accurate at the time of publication.

The White House says there’s no final decision on student loan cancellation, despite a report from the Washington Post that the Biden administration is set to forgive $10,000 per federal borrower.

The latest LendingTree study looks at how borrowers would be impacted by the proposed $10,000 in forgiveness. For deeply indebted borrowers, the impact might be minimal, but it could potentially free others — 1 in 3 eligible borrowers, in fact — from all their federal student debt.

The difference lies in how much debt each borrower carries and what kind of student loans they have. It’s expected that only federal loans owned by the government will be eligible for forgiveness, accounting for about $1.4 trillion (or 78%) of outstanding student debt. Forgiveness isn’t likely for borrowers with privately managed federal or private student loans. Not only that, but the Washington Post report highlights that forgiveness is likely to be limited to Americans who earn less than $150,000 annually or married couples filing jointly who earn less than $300,000 a year.

LendingTree researchers looked specifically at loans issued via the federal government’s direct loan program (including PLUS loans). We found that $10,000 in forgiveness would provide significant relief — more in some places than in others.

Key findings

  • 1 in 3 (33.3%) borrowers could see all their federal student direct loans wiped away under a $10,000 forgiveness plan. An additional 20.1% could see their balances cut by at least half.
  • 37.8% of Wyoming borrowers would discharge all their federal student debt — the highest percentage among the 50 states and the District of Columbia. Rounding out the top three are Nevada (36.6%) and Utah (36.4%).
  • The District of Columbia has the lowest percentage of borrowers who would shed all their federal loans (25.3%), with Virginia (28.6%), Georgia (28.9%) and Maryland (28.9%) close. D.C. also has the highest rate of borrowers who owe $100,000 or more in student loans, at 16.0%.
  • 7.3% of all borrowers owe more than $100,000, meaning they’d still be on the hook for at least 90% of their balances.

1 in 3 borrowers could have debt wiped away

According to our analysis, 33.3% of borrowers — about 13.1 million people — would see their entire federal direct loan debt wiped away under a $10,000 forgiveness plan. All in all, this forgiveness would amount to $326.4 billion.

An additional 20.1%, or 7.9 million people, would see their balances cut by at least half. Likewise, 21.2% (8.3 million people) would see a quarter of their respective balances disappear, and 18.2% (7.1 million people) would get rid of at least 10% of their debt.

Federal student loan balances: Breakdown of how much borrowers owe

Less than $10,000Between $10,001 and $20,000Between $20,001 and $40,000Between $40,001 and $100,000Between $100,001 and $200,000More than $200,000
% who owe …33.3%20.1%21.2%18.2%5.2%2.1%
# who owe …13,060,2227,870,5788,326,6917,124,2182,048,903813,188

Source: LendingTree analysis of U.S. Department of Education data. Note: As of Dec. 31, 2021.

However, 7.3% of borrowers owe more than $100,000 in student loans. For them, $10,000 in forgiveness wouldn’t make a huge dent in their balance, as they’d still owe at least 90% of their total federal student loan debt.

And as mentioned, the numbers above only account for direct loans — the most popular loan type, but by no means the only one. Other federal student loans, such as FFEL and Perkins loans, as well as all private student loans, would continue to weigh on borrowers’ finances.

Since direct loans were the only kind of loan eligible for the emergency federal forbearance that was passed in response to the COVID-19 pandemic — it’s since been extended six times — we predict they might be the only ones eligible for $10,000 in loan forgiveness. That said, we don’t know yet which loans would be covered if loan forgiveness were to happen. (UPDATE: The payment pause in August 2022 was extended a seventh time through Dec. 31, 2022.)

Wyoming, Nevada, Utah borrowers most likely to become debt-free through student loan forgiveness

When we look state by state at the impact of $10,000 in loan forgiveness, Wyoming, Nevada and Utah have the highest percentage of borrowers who would see their federal student loan balance wiped away.

In Wyoming, 37.8% of the state’s borrowers would become student loan-free. In Nevada, 117,477 borrowers — 36.6% of the state’s total — would get a clean slate. And in Utah, 36.4% of its borrowers could start fresh.

Compared to some other states, these three have fairly low populations of student loan borrowers. Borrowers in these states also tend to have smaller debt loads, allowing for $10,000 in loan forgiveness to have a more significant impact.

That said, even in these top-of-the-list states, the average debt is still significant. For example, our analysis of Utah student loans shows average balances among federal and private borrowers of $31,046. Our data on Nevada student loans yields average balances of $32,402.

Other states with a high percentage of debt-free people under a $10,000 forgiveness model include North Dakota, Alaska and Oklahoma.

Percentage of borrowers who would have their federal student loan debt eliminated with $10,000 in forgiveness

RankState% of borrowersNumber of borrowers
1Wyoming37.8%19,216
2Nevada36.6%117,477
3Utah36.4%105,619
4North Dakota35.8%29,724
5Alaska35.4%22,377
6Oklahoma35.0%154,533
7New Mexico34.8%72,894
7Nebraska34.8%81,647
7Louisiana34.8%208,146
10West Virginia34.6%74,170
11Iowa34.5%143,732
12Arkansas34.4%124,486
13Rhode Island34.3%46,627
13Arizona34.3%281,280
15Texas34.2%1,157,540
16Mississippi34.1%139,409
17Idaho33.8%70,552
18California33.5%1,178,004
19Kentucky33.3%186,873
19Kansas33.3%120,678
21South Dakota33.2%36,539
21Wisconsin33.2%229,877
23Montana33.1%39,416
24Maine32.9%58,538
25Hawaii32.7%37,059
25Washington32.7%242,539
27Indiana32.4%276,776
28Massachusetts31.9%275,388
29New York31.8%734,814
30Florida31.6%768,825
30Delaware31.6%38,567
30New Jersey31.6%360,326
33Tennessee31.5%253,956
33Alabama31.5%187,397
35Michigan31.4%417,179
35Ohio31.4%529,581
37Connecticut31.3%148,976
37Illinois31.3%479,649
39New Hampshire31.2%56,661
39Missouri31.2%240,471
41Colorado31.0%226,013
42Minnesota30.8%231,043
42Oregon30.8%156,789
44Pennsylvania30.2%519,022
45Vermont30.0%21,911
46South Carolina29.4%203,899
47North Carolina29.2%363,504
48Maryland28.9%228,619
48Georgia28.9%450,174
50Virginia28.6%295,102
51District of Columbia25.3%27,520

Source: LendingTree analysis of U.S. Department of Education data. Note: As of Dec. 31, 2021.

When exploring the percentage of borrowers who would have their debt eliminated with $10,000 in loan forgiveness, the District of Columbia, Virginia, Georgia and Maryland sit at the bottom.

This finding aligns with our analysis of student loan debt in these states. Previously, we found that the average federal and private student loan balances in these states are:

  • District of Columbia: $52,049 (highest in U.S.)
  • Maryland: $39,505 (second-highest)
  • Georgia: $39,272 (third-highest)
  • Virginia: $37,098 (fourth-highest)

Regardless, these locations would still see a significant population of borrowers become debt-free. In D.C., 25.3% of its borrowers would shed their debt. In Virginia, Georgia and Maryland, that percentage was higher at just below 29%.

Just ahead of this cluster of those least likely to have eligible federal debt less than $10,000 are the Carolinas.

D.C. also has the highest percentage of borrowers who owe more than $100,000, and thus would be left with at least 90% of their balance: 16.0%, or 17,396 people.

Percentage of borrowers who owe at least $100,000 in federal student loans

RankState% of borrowersNumber of borrowers
1District of Columbia16.0%17,396
2Maryland10.9%86,239
3Georgia9.8%152,739
4Virginia8.7%89,892
5Delaware8.5%10,405
5Mississippi8.5%34,759
5New York8.5%195,857
5Illinois8.5%130,069
9California8.4%295,810
9Florida8.4%204,532
11South Carolina8.2%56,887
12Vermont8.1%5,950
12Hawaii8.1%9,172
12North Carolina8.1%100,655
15Alabama8.0%47,908
16Colorado7.6%55,608
16Tennessee7.6%61,222
18New Jersey7.5%85,706
18Oregon7.5%38,024
18Washington7.5%55,362
21Connecticut7.3%34,688
22Arizona7.2%59,494
22Louisiana7.2%43,283
22Michigan7.2%94,877
25Pennsylvania7.1%121,951
26Missouri7.0%54,076
26New Mexico7.0%14,597
26Massachusetts7.0%59,996
29Nevada6.9%22,101
30Alaska6.8%4,307
31New Hampshire6.7%12,189
32Texas6.5%218,535
32Ohio6.5%108,888
34Arkansas6.4%23,173
35Maine6.3%11,118
36Montana6.2%7,414
37Rhode Island6.1%8,340
37Nebraska6.1%14,224
39Kansas6.0%21,735
40Minnesota5.9%44,307
40Kentucky5.9%33,137
40Utah5.9%17,099
43Indiana5.8%49,519
43Oklahoma5.8%25,469
45Idaho5.7%11,950
45Wyoming5.7%2,906
47West Virginia5.6%12,079
48Wisconsin5.5%38,345
49South Dakota5.2%5,665
50Iowa5.1%21,041
51North Dakota4.3%3,609

Source: LendingTree analysis of U.S. Department of Education data. Note: As of Dec. 31, 2021.

Other ways to get your student loans forgiven

While reports indicate some form of federal student loan forgiveness is on the way, it’s never a certainty until it’s announced — and we also don’t yet know which loans will be eligible. Still, in the meantime, there are other ways to get your student loans forgiven.

  • The Public Service Loan Forgiveness (PSLF) program will forgive your loans after 10 years of working in public service. And in October 2021, this program was temporarily expanded to include borrowers who didn’t previously qualify — though you’ll need to act before Oct. 31, 2022.
  • The Teacher Loan Forgiveness program offers up to $17,500 in student loan cancellation after five years of working in an eligible school.
  • Most states also offer loan repayment assistance programs to borrowers in certain occupations, typically those who work in high-need or underserved areas. Plus, more and more employers are offering student loan assistance as an employee benefit.
  • Finally, you could get your student loan balance forgiven after 20 or 25 years on an income-driven repayment plan. While you usually have to pay taxes on the forgiven amount, the government has waived this tax bill until at least Jan. 1, 2026, with the American Rescue Plan Act of 2021.

Since President Joe Biden took office in January 2021, his administration has announced plans for $25 billion in forgiveness, including:

  • More than $8.5 billion for more than 400,000 borrowers related to total and permanent disability discharges
  • $7.3 billion for more than 127,000 borrowers through the PSLF program
  • $5.8 billion for 566,000 students who attended Corinthian Colleges between 1995 and its closure in 2015

Using data from the U.S. Department of Education as of Dec. 31, 2021, analysts calculated the loan-size distribution of directly owned federal loans, which the government would potentially be able to write off.

The Education Department reports the balance distribution of all federal loans for each state and the total number of borrowers and total balances of directly held loans.

Analysts assume that the difference between all federal and directly held loans was proportional across balance distribution. The amount that would be potentially forgiven in each state is the sum of borrowers with balances over $10,000 multiplied by $10,000, plus the total amount outstanding for borrowers who owe less than $10,000.

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