Editor’s note: This story has been updated to correct that the program applies to some graduate programs if they are Grad Plus loans subsidized by the federal government.

(NewsNation) — President Joe Biden announced Wednesday that the Department of Education will forgive tens of thousands of dollars in federal student loan debt for millions of people.

But there’s a lot of fine print. Here are the basics:

• If you individually earned less than $125,000 per year in the 2020 or 2021 tax year (or $250,000 for married couples), up to $10,000 of student loan debt will be forgiven.
• People within the same eligibility criteria who received a Pell Grant are eligible for $20,000 in student loan forgiveness. If you want to learn how to find out if you got a Pell Grant, click here.

But, there’s more:

• Only people who have federal student loan debt are eligible; private loan holders are not.
• The debt forgiveness program applies mainly to undergraduate degrees, but some graduate programs can qualify only if they are Grad Plus loans subsidized by the federal government.
• Current students are only eligible if they took out their loans before July 1, 2022.
• Although a yearly or signing bonus is separate from your salary, it will count toward your total reported income for the year.

How do I apply and how long do I have?

The Department of Education will release information on how to sign up for student loan forgiveness in the coming weeks.

Nearly 8 million borrowers, whose income information the department already has on file, will be automatically enrolled in relief. Everyone else needs to fill out an application that will be available by the end of the year.

“The Department of Education will work quickly and efficiently to set up a simple application process for borrowers to claim relief,” according to a White House statement.

The pause on federal student loan repayment will be extended once again through December 31, 2022, but you should expect to resume payments in January of the coming year.

What steps do I need to take?

Make sure your loan servicer has all your correct information, including postal address, email and phone number, so that you’ll be able to receive any guidance it provides and follow any pertinent instructions.

Not sure who your servicer is? The Department of Education has a website with instructions: “Who is my loan servicer?”

In the coming months, watch for notifications from your loan servicer and take precautions — there are bound to be issues. Look out for a message that you have either a zero balance or that your balance has been reduced by $10,000 or $20,000. Save this information for later in case something changes.

What about current and future students?

Current students can qualify for loans taken out before July 1, 2022, but if someone else claims you as a dependent when filing taxes, eligibility will be based on that person’s income and not your own.

The Biden administration plans to help future students by cutting monthly payments in half for undergraduate loans and proposing a rule that those who have worked at a non-profit, in the military, or in federal, state, or local government, receive appropriate credit.

By capping monthly payments for undergraduate loans at 5% of a borrower’s discretionary income — half of the rate that borrowers must pay now — will lower the average annual student loan payment by more than $1,000.

Will forgiveness include Parent Plus loans?

Yes, student loan forgiveness applies to Parent Plus loans. According to the latest data from the Department of Education, parents of 3.6 million students owe more than $107 billion in Parent Plus loans as of March 2022. This signifies roughly 6% of the entire $1.6 trillion in federal student loan debt Americans owe.

HOw many people will this help and how much is it costing taxpayers?

If all borrowers claim the assistance they are entitled to, this could provide relief to up to 43 million borrowers and completely cancel the full remaining balance for roughly 20 million borrowers.

Among borrowers, 21% are 25 years and under, and 44% are ages 26-39. More than a third are borrowers age 40 and up, including 5% of borrowers who are senior citizens.

Black students are more likely to have to borrow for school and more likely to take out larger loans. Black borrowers are twice as likely to have received Pell Grants compared to their white peers. 60% of borrowers have Pell grants and are eligible for $20,000 of relief.

The cost of the $10,000 cancellation initiative could cost the federal government anywhere from $300 billion to $980 billion, according to estimates by the University of Pennsylvania.

The Root of the problem

Critics say loan forgiveness is a distraction from the bigger problem: college tuition is too expensive and prevents many high school graduates from seeking higher education.

The president promised to protect future students and taxpayers by reducing the cost of college and holding schools accountable when they hike up prices. To reduce the cost, Biden plans to double the maximum Pell Grant and make community college free.

The administration says it also plans to hold more colleges accountable for their obligation to keep costs reasonable and ensure borrowers get value for their investments.