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Making Sense of Self-Certification of Income for Student Loan Forgiveness

Will borrowers provide honest information about their income? What happens if somebody lies to get forgiveness?

Written By: Michael P. Lux, Esq.


Affiliate Disclosure and Integrity Pledge

Even though the application for Biden’s one-time student loan forgiveness program has only been available for two weeks, more than twenty million borrowers have already signed up.

Completing the form is incredibly easy.

However, one aspect of the application may give borrowers and taxpayers cause for concern: self-certification of income.

Borrowers are not required to submit pay stubs or tax records. Instead, they must affirm under penalty of perjury that they do not earn more than the income limits.

What are the Income Limits for Biden’s One-Time Forgiveness Program?

Individuals must be below $125,000 in income for either 2020 or 2021. For couples, the number jumps to $250,000.

Notably, the income requirement is based on your AGI from either year’s tax return.

Borrowers must certify that they meet the income requirement under penalty of perjury. They must also agree to submit proof of income if asked by the Department of Education.

Under Penalty of Perjury

Most people understand that perjury is a crime committed when a witness lies under oath in a court proceeding. However, the crime of perjury can happen in many other situations.

Rather than jumping into the nuance of the crime of perjury, the important detail for people applying for forgiveness is that written certifications can qualify as perjury.

The federal statutes listed on the forgiveness application indicate that falsification could result in a federal prison sentence of up to five years.

Will People Lie and Cost Taxpayers Extra Money?

Fraud concerns are worth exploring.

Borrowers can submit a 5-minute application and get $20,000 of loan forgiveness without presenting any documentation.

Given that the recent Paycheck Protection Program saw fraud rates estimated at between 10% and 15%, this concern seems valid.

However, there are a few significant differences between the PPP program and the one-time forgiveness program.

  • Under the Paycheck Protection Program, people received funds deposited directly into their bank accounts. One-time forgiveness is focused on erasing existing debt.
  • Forgivable PPP loans could be hundreds of thousands of dollars or more. One-time forgiveness is capped at $20,000.
  • It is much easier to fake a business under the PPP rules than it is to fake an existing student loan account with the Department of Education.

Nonetheless, some borrowers who earn above the income limitations may try to use self-certification as an opportunity to cheat the system.

Catching Borrowers who Cheat

Lying under penalty of perjury for student loan forgiveness would be very stupid.

For starters, the risk-reward math doesn’t add up. If you made above $125k for 2020 and 2021, you are a high earner. $10,000 of forgiveness represents less than 10% of your income in a single year. Risking five years of jail time doesn’t seem worth it.

Additionally, the Biden Administration will ask between one and five million borrowers to document their income. If these requests show abuse, they may ask even more borrowers to submit proof of income.

Don’t Hesitate to Apply if Eligible

While the risks and consequences are steep for those who cheat, eligible borrowers shouldn’t hesitate to apply for the one-time forgiveness they deserve.

Even if you are asked to provide proof of income, getting the necessary documents from the IRS is quite easy.

The entire process is designed to make it simple for eligible borrowers to obtain relief and ensure that ineligible borrowers do not. We will soon find out whether or not the Department of Education was able to hit this mark.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

2 thoughts on “Making Sense of Self-Certification of Income for Student Loan Forgiveness”

  1. Can you touch on self-certification and the SAVE plan? There are no income limits for the SAVE plan, so how should borrowers report their income? For instance, I am hearing more and more about borrowers choosing not to wait for servicers to recalculate a new payment and and are reapplying for IDR with their 2019 AGIs because that was the last year of income certification prior to the COVID pause. If income has increased since then, should borrowers use their most recent AGI? This seems unfair to me, because if left alone for the servicer to recalculate correctly, they would most likely use the 2019 AGI as that would be the last income they’d have.


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