What happens next if you receive student loan forgiveness?
Four things to be on the lookout for


After the Biden administration's February announcement that it was canceling another $1.2 billion in student loan debt, an estimated 153,000 borrowers got an email notifying them of their remaining federal student loan balance disappearing, said CNN. "Impacted borrowers got an email addressed from President Joe Biden that read, 'Congratulations — all or a portion of your federal student loans will be forgiven because you qualify for early loan forgiveness under my Administration's SAVE Plan,'" said Nerdwallet.
But if you have had your student loan debt hanging over your head for at least 10 years (the minimum time in repayment required to qualify for this SAVE plan forgiveness), it might seem too simple to have your student loan debt just disappear. Is that really the end of the story? If the entirety of your debt was forgiven, then yes. That said, there are other things to look out for if you have had your student loan debt forgiven, either through the Biden administration's latest move or in another way.
1. You'll get an alert (and see your balance change) when your account updates.
When your student loan is discharged, you should receive a notification from your student loan servicer. This can arrive "via email, mail and/or your online loan servicing account (depending how your communication preferences are set)," said Nerdwallet. Additionally, you should see your balance at $0 when you log onto the Federal Student Aid website.
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If either of the above doesn't happen immediately, don't panic. The Department of Education "generally takes around 30 days to apply updates to borrower accounts," and "borrowers who received forgiveness through other programs have reported much longer wait times," said Nerdwallet. It also may take some time for your loan servicer to get in touch — it's suggested you wait at least 21 days from the White House forgiveness email before following up with your servicer.
Have a payment due in the interim? "You should make it if you can," said Kristen Ahlenius, director of education and advice at Your Money Line, in an interview with Nerdwallet. If you were not intended to make that payment, "you will get a refund for overpayments."
2. You may see a slight drop in your credit score.
While it may seem counterintuitive since you have just had debt erased, "for a brief period of time, that assistance can work against you, as you might see your credit scores drop slightly," said Investopedia. This happens due to the fact that "student loans are a type of installment loan," and so when it is "erased from your credit history, it reduces the diversity of your credit lines."
No need to fret about this too much though, as your credit card should bounce back pretty soon. Further, said Investopedia, "the dip shouldn't be too dramatic."
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3. You likely won't have to worry about tax implications.
Thanks in part to the American Rescue Plan Act of 2021, you should not have to worry about what is sometimes called "the student loan tax bomb" after forgiveness, said Yahoo Finance. This act, which "applies to loans that are discharged between January 1, 2021, and December 31, 2025," "made forgiven student loans exempt from federal income taxes."
That said, this only applies to federal taxes. If you live in a select number of states — Indiana, North Carolina and Mississippi — then income-driven student loan forgiveness is treated as taxable income, said Nerdwallet, meaning you will owe taxes. To avoid any surprises come tax time, make sure to check what your state's laws are.
4. You should be on the lookout for scammers.
Loan forgiveness means you will not have student loan payments and due dates hanging over your head anymore — but you should still stay aware of the possibility of scams. "Scammers are targeting student loan borrowers right now," Nerdwallet said.
Remember that "the Education Department and your student loan servicer will never call you, and federal loan forgiveness programs don't have fees," said Nerdwallet. Triple check that the email address of any communications regarding your student loans are legitimate, and do not hesitate to report anything that seems fishy.
Becca Stanek has worked as an editor and writer in the personal finance space since 2017. She previously served as a deputy editor and later a managing editor overseeing investing and savings content at LendingTree and as an editor at the financial startup SmartAsset, where she focused on retirement- and financial-adviser-related content. Before that, Becca was a staff writer at The Week, primarily contributing to Speed Reads.
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