How to know if you automatically qualify for Biden's student-loan forgiveness

• Biden announced up to $20,000 in student-loan forgiveness in August.
• The majority of borrowers will have to apply for relief, while eight million should automatically qualify.

One-time student-loan forgiveness could be hitting millions of borrowers accounts by the end of the year — and some could be eligible to get that relief automatically.

At the end of August, President Joe Biden announced up to $20,000 in student-loan forgiveness for Pell Grant recipients making under $125,000 a year, and up to $10,000 in relief for other federal borrowers under the same income cap.

While an application form is set to go live in early October that borrowers can fill out to apply for relief, the Education Department estimated that about 8 million federal borrowers should receive the loan forgiveness automatically without any additional action on their part.

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

According to an FAQ posted on the studentaid.gov website, there are two ways the department will determine if you are automatically eligible to receive relief:

1. The Free Application for Federal Student Aid (FAFSA)
2. Income-driven repayment applications.

Students or parents can submit a FAFSA form during college to determine the amount of federal student aid they can receive to help cover tuition costs. Borrowers can apply and enroll in income-driven repayment plans to provide them with affordable monthly student-loan payment based on income post-graduation.

If parents or borrowers submitted their income data for tax years 2021 or 2020 for either of those programs, the department will use that information to determine whether borrowers meet the income requirements — individually making under $125,000 a year — to apply for student-loan forgiveness. The department noted that if it has borrower data for both of those years, it will choose the year with the lower income.

All borrowers determined to receive relief automatically will receive an email and a text message from the department, and the department will provide that information to the student-loan companies to process that relief.

A new income-driven repayment plan is also expected to be rolled out that's intended to make monthly payments more affordable while preventing interest from adding onto a borrower's principal balance. That plan will be a part of the department's regulatory rulemaking process with implementation planned for July of next year, alongside reforms to other targeted loan forgiveness programs like Public Service Loan Forgiveness and discharged for borrowers with total and permanent disabilities.