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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Students currently enrolled in college and graduate school are eligible to apply for forgiveness of up to $20,000 of the federal student loans they’ve received if they meet certain family income requirements, according to information posted by Federal Student Aid (FSA), an office of the U.S. Department of Education (DOE).

When President Joe Biden’s plan for one-time loan cancellation was announced in August, it was clear that college graduates with federal loans were eligible, as were those who had dropped out of college but still needed to pay back their federal loans.

Now it has become apparent that students enrolled in college before June 30, 2022, will also be able to apply for federal loan forgiveness.

“Borrowers are eligible for debt relief regardless of whether they’re in repayment, in school, or in grace, as long as they meet the income requirements and have eligible loans,” according to the FSA Fact Sheet “One Time Student Loan Debt Relief .”

Recommended: Student Loan Forgiveness: Programs for Relief and Mass Forgiveness

What Are the Requirements for Students to Apply for Forgiveness?

Current students can apply for forgiveness for federal loans if they received them before June 30, 2022. (Unfortunately, this means that freshmen who started this fall aren’t eligible.) If the students are dependents of their parents, FSA will be looking at the annual income of the parents to certify eligibility, not the student.

“If you were enrolled in school as a dependent student for financial aid purposes between July 1, 2021, and June 30, 2022, your eligibility is based on parent income. After you fill out your own application form, we’ll contact you so your parent can complete a Parent Income Form,” explains the FSA Fact Sheet.

Current undergraduates and graduate students can apply for forgiveness, as can those who did not complete their degree. “Current students and borrowers who have federally held undergraduate, graduate, and Parent PLUS loans that were distributed on or before June 30, 2022 are eligible for the relief, said Megan Walter, a policy analyst for the National Association of Student Financial Aid Administrators,” in U.S. News & World Report.

For dependent students, the important question is “What is the income of your parents?” The income cutoff for this one-time debt cancellation is $125,000 for a single parent or $250,000 for the household. If the student’s parents meet this eligibility requirement, then the student could receive up to $10,000 in debt relief.

As for the $20,000 in debt relief that has been announced, the only students eligible to apply for it are those who have already received a Pell Grant and whose parents’ household incomes do not exceed $250,000.

A Pell Grant is awarded to undergraduate students with low or moderate income. If you’re unsure, you can log in to StudentAid.gov to see if you received a Pell Grant.

Recommended: How to Apply for Biden’s Student Loan Forgiveness

When Will the Loan Forgiveness Application Be Available?

The application for one-time federal student loan forgiveness went live online on Oct. 17, 2022. After you apply, the DOE will determine your eligibility and will contact you if they need more information. Your loan servicer will notify you when your relief has been processed.

Nearly 8 million borrowers may be eligible to receive relief without applying for it because the DOE already has their income information. But if you are uncertain whether you fall into that group, it’s recommended that you fill out the application.

Qualified borrowers whose repayments are set to resume or start in 2023 are advised to apply without delay in order to receive relief before the pause on all federal loan payments expires after Dec. 31, 2022.

Which Federal Student Loans Are Eligible for Forgiveness?

Subsidized loans, unsubsidized loans, parent PLUS loans, and graduate PLUS loans held by the Department of Education (ED) are eligible for forgiveness programs. The following specific types of federal student loans with an outstanding balance as of June 30, 2022, also qualify for relief:

•   William D. Ford Federal Direct Loan (Direct Loan) Program loans

•   Federal Family Education Loan (FFEL) Program loans held by ED or in default at a guaranty agency

•   Federal Perkins Loan Program loans held by ED

•   Defaulted loans (includes ED-held or commercially serviced Subsidized Stafford, Unsubsidized Stafford, parent PLUS, and graduate PLUS; and Perkins loans held by ED)

Consolidation loans are also eligible for relief, as long as all of the underlying loans that were consolidated were ED-held loans and were disbursed on or before June 30, 2022.

Additionally, consolidation loans comprised of any FFEL or Perkins loans not held by ED are also eligible, as long as the borrower applied for consolidation before Sept. 29, 2022, says the FSA website.

What About Private Student Loans?

Private (non-federal) loans are not eligible for Biden’s debt relief. Also, if you consolidated federal loans into a private loan, the consolidated private loan is not eligible for debt relief. Once you refinance, you cannot apply for any of Biden’s forgiveness programs for that loan.

Will the Canceled Student Loan Debt be Taxable?

One-time student loan debt relief won’t be taxed at the federal level. Some states may be taxing this debt relief, however, so check with your state of residence for the latest information.

The FSA site said, “If you would like to opt out of debt relief for any reason — including because you are concerned about a state tax liability — contact your loan servicer by phone or email and tell them that you don’t want to receive one-time student loan debt relief.”

Recommended: What Biden’s Student Loan Debt Relief Means for Your Taxes

Is Federal Student Loan Relief a Certainty?

Biden’s debt relief plan may face obstacles. The burden placed on students by their large loans has been a burning controversy for years. Some 43 million Americans are paying down their student loans. The average student debt per person is over $37,000, with half of all student borrowers still owing $20,000 more than 20 years after they entered school.

When President Biden announced his student loan relief plan in August, he said, “In keeping with my campaign promise, my Administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023.”

Biden has emphasized that the debt relief targets low- and middle-income families.

Nonetheless, the relief plan has met with opposition. Some say it will worsen inflation, others believe that Biden does not have the authority for a debt cancellation. And there are those who say that debt relief is unfair to people who made personal sacrifices to pay off their loans without government forgiveness.

Several lawsuits have been filed to try to halt the one-time debt cancellation. As of October 12, none had succeeded in stopping Biden’s relief plan.

Recommended: What You Need to Know About the Challenges to Biden’s Student Loan Forgiveness

The Takeaway

Current students are eligible for President Biden’s one-time student loan debt forgiveness of up to $20,000 if their federal loans were disbursed before June 30, 2022, and if income criteria is met. If the student is a dependent, the annual income the FSA will be looking at is that of the parents, not the student. That income can’t exceed $125,000 for a single parent or $250,000 for the household.

3 Student Loan Tips

1. Can’t cover your school bills? If you’ve exhausted all federal aid options, private student loans can fill gaps in need, up to the school’s cost of attendance, which includes tuition, books, housing, meals, transportation, and personal expenses.
2. Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.
3. Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

Recommended: FAFSA Guide

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How old do student loans have to be to qualify for Biden’s forgiveness plan?

Federal student loans received by a student before June 30, 2022 will be eligible for one-time relief as long as the income requirement for eligibility is met.

How long do I have to apply for debt relief?

Once the application is live, you’ll have until December 31, 2023, to submit your application for student loan debt relief.

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Photo credit: iStock/Drazen Zigic

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In our efforts to bring you the latest updates on things that might impact your financial life, we may occasionally enter the political fray, covering candidates, bills, laws and more. Please note: SoFi does not endorse or take official positions on any candidates and the bills they may be sponsoring or proposing. We may occasionally support legislation that we believe would be beneficial to our members, and will make sure to call it out when we do. Our reporting otherwise is for informational purposes only, and shouldn’t be construed as an endorsement.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re a fresh arrival to the United States, you’ll be glad to know that even if you’re undocumented, opening a bank account is possible. Which is very good news; after all, taking care of bills and everyday purchases is a lot easier — not to mention safer — when your cash is safely stashed in a checking account.

However, you will have to follow certain steps and perhaps a workaround or two. Probably the most important is that you’ll just need to provide an alternative for the Social Security number you don’t have. You may well find that a Tax Identification Number, or ITIN, along with the other required identification, can get the job done.

Read on for more about how an undocumented immigrant can open a bank account and the benefits of doing so.

What Do Immigrants Need to Open a Bank Account?

Like anyone else who opens a bank account, immigrants will need to provide and verify basic identifying information, such as their name and date of birth, using government-issued identification. This requirement may be met by a driver’s license, passport, birth certificate, or consular ID — and you’ll likely need to provide two different types of identification.

In addition, you’ll need to prove your residence. This can probably be done by presenting a utility bill, lease contract, or other official statement that includes your current address.

Finally, you’ll need either a Social Security number (SSN) or Tax Identification Number (ITIN). As an immigrant, the latter may be easier to obtain.

So, to recap, to open a bank account, you’ll want to check the eligibility requirements of the financial institution to which you’re applying, but you’ll probably need:

•  Official identification documentation

•  Proof of address

•  An SSN or ITIN

•  Anything else the bank might require (such as a minimum opening deposit)

💡 Additional help: What Are All the Requirements to Open a Bank Account?

What Is an ITIN?

As just mentioned, an ITIN may be an option to an SSN at many financial institutions. You may wonder what exactly that is. Here’s the scoop: ITIN is short for Individual Taxpayer Identification Number. It’s an official form of identification that the IRS (Internal Revenue Service) issues to immigrants in order to make it possible to file taxes.

But your ITIN has other perks, too — such as allowing you to open a bank account with financial institutions that accept this form of identification instead of an SSN. These days, there are plenty of banks that fit that category, but you should always contact the bank you’re considering to verify that they’ll process an account application without an SSN.

Keep in mind, too, that you aren’t automatically issued an ITIN once you arrive in the U.S. In order to obtain one, you’ll need to apply for one with the IRS directly. You can do this by mail or in person.

How to Open a Bank Account With an ITIN Instead of a SSN

Here’s the good news: Once you have an ITIN, using it in place of an SSN to open an account should be a fairly straightforward process. At many banks, you’ll simply supply that number instead of your SSN on that part of the application. If you apply online for a bank account, the application process may take only a few minutes.

The rest of the application will involve the bank gathering documentation, accepting your opening deposit, and issuing your bank account number and debit card. The process of establishing the account may take a couple of days. In addition, you may need to wait a week or more to receive your debit card in the mail.

And then, voila: You’re the proud owner of a U.S. bank account!

Benefits of Opening a Bank Account for Undocumented Immigrants

If you’ve been doing most of your financial transactions in cash for a while, you may wonder if going through the steps it takes to open a bank account is even worth it.

For many immigrants, it definitely is. A bank account makes it safer and easier to store and use your money. What’s more, it can also help you establish history and move toward legitimizing yourself as an American resident.

Personal Safety

Carrying cash is always risky. If you accidentally drop some (which can easily happen while you’re lugging bags in one hand and a coffee in the other), it’s gone forever. That’s not to mention the risk of others eyeing your cash. Paper money is liable to theft, and carrying large amounts of cash could even put you at risk of physical violence.

Having a checking account makes it possible to store larger amounts of money with a lower risk level. You’ll still be able to access cash when you need it using an ATM or your debit card. For these reasons, opening a bank account could increase your level of physical safety as an immigrant.

Establishing History

Opening a bank account shows people that you’re here on at least a semi-permanent basis, and may even help you establish state residency. While the process of naturalization is, of course, long and complex, having a bank account can be one small step toward legitimizing your status as a U.S. resident.

Ability to Save Money

Most banks offer both checking and savings accounts—the latter of which is an excellent vehicle for building up a rainy day fund. Having a separate savings account makes it a lot easier to put some money “out of sight, out of mind” so you’re prepared for an emergency. And, of course, it’s a lot more secure than stuffing cash into a coffee can or under the mattress.

Earning Interest

In addition to being physically safer, bank accounts also give you an edge against inflation. Here’s why: Many of them make it possible to earn interest on your balances—even on a checking account. The interest you earn might be pretty low, but it’s still better than no growth at all. Plus, it’s a low-risk investment given that money in a legitimate bank account is FDIC-insured up to $250,000.

The Takeaway

While it may take a few extra steps, it’s totally possible for an undocumented immigrant to open a bank account. You may just have to apply for an ITIN to use in place of your SSN, and find a bank that accepts ITINs. But once you get that taken care of, you’ll have access to a safe, potentially interest-earning place to stash your cash.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

How do undocumented immigrants open a bank account?

An undocumented immigrant will need an alternative to the Social Security number, or SSN, in order to open a bank account. This number is called an Individual Taxpayer Identification Number, or ITIN, and you can apply for one through the RIS. Many financial institutions will accept an ITIN in place of a SSN.

Can I open a bank account without an SSN or ITIN?

Unfortunately, you’ll likely need one or the other of these official, identifying numbers in order to open a bank account.

Can a U.S. citizen open a bank account abroad?

Yes, but it can be tricky. Many U.S. citizens have offshore bank accounts, though the process of applying for one may vary depending on which country you’re hoping to open an account in. It can involve a lot of paperwork, and starting this kind of account may have tax ramifications in both the U.S. and the foreign country in question.

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Photo credit: iStock/Bilgehan Tuzcu

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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