Student loan relief was one of the cornerstones of President Joe Biden’s campaign. Though the details surrounding who may qualify were always a bit fuzzy, the message was clear: Widespread student loan relief was on the way.
Yet student loan aid has been noticeably missing from recent stimulus and spending plans, as well as Biden’s latest budget proposal. Now hopeful borrowers are wondering if he’ll double back on his promises.
If you’re one of them, you may not have to hold your breath for help.
Borrowers currently have two main options for getting their student loan debt cancelled, according to Mark Kantrowitz, a student loan expert and author of “How to Appeal for More College Financial Aid.” One is through loan discharge, which happens in the case of your school closing while you’re enrolled or when you are unable to repay the debt (due to death or disability, for instance).
The other option is student loan forgiveness, which is usually provided for working in a particular occupation, he says. In fact, there are dozens of jobs that can qualify you for partial or full student loan forgiveness within the next few years. Here’s a closer look at what’s available.
Popular Student Loan Forgiveness Programs
The most well-recognized loan forgiveness program is Public Service Loan Forgiveness (PSLF), which offers full forgiveness of qualified federal student loans after making 120 payments while working in the public service sector.
“This program can provide major financial relief to public servants, but unfortunately, some borrowers have said it’s hard to qualify,” said Rebecca Safier, a certified student loan counselor and student debt expert for Student Loan Hero. “In recent years, a number of borrowers have reported that their applications got denied after they spent a decade doing what they thought was qualifying work.”
Less than 2% of borrowers who've applied for PSLF have had their loans discharged as of November 2020, the latest available data from the federal government. The average amount forgiven was about $76,900. Some common reasons for getting denied include making too few payments or having missing information on the application.
“If you’re pursuing PSLF, make sure to communicate with your loan servicer frequently to ensure you’re meeting all the criteria to get loan forgiveness,” Safier says. That includes reviewing the program’s requirements carefully, submitting the PSLF form every year to certify your employer and tracking your payments closely in case your count differs from the loan servicer’s count. “And keep an eye out for any changes to the program, as President Biden has talked about changing it to a five-year program that offers $10,000 in loan forgiveness annually,” Safier added.
Another option for educators is the Teacher Loan Forgiveness Program, which is designed for full-time teachers employed at a school serving low-income students (the school must be listed in the Teacher Cancellation Low Income Directory to qualify). Borrowers who teach special education or secondary math or science are eligible to get $17,500 knocked off their balance after five years. Teachers of other subjects who are considered “highly qualified” — meaning they obtained at least a bachelor’s degree, plus full state certification as a teacher — can receive $5,000 in forgiveness. If you think you qualify, you can submit an application for forgiveness.
There are several other federal forgiveness programs based on occupation. For example, some healthcare professionals may qualify for Nurse Corps Loan Repayment, which covers up to 85% of unpaid nursing school debt. If you’re an active duty service member or veteran, you might also be eligible for loan repayment assistance from the Armed Forces.
Many states also offer loan repayment assistance programs for qualifying professionals. Some common careers that are eligible include dentist, doctor, veterinarian, lawyer and pharmacist, among others. Unlike federal loan forgiveness options, some of these loan repayment programs will help you repay both federal and private student loans, Safier says.
“Some schools and private organizations offer similar programs, so it’s worth doing some independent research to see if there’s a program that could be a good fit for you,” she added. For example, the University of Virginia School of Law covers up to 100% of student loans for graduates who make less than $65,000 per year. The Florida Bar Foundation provides forgivable loans of up to $5,000 per year to help local lawyers pay off their student debt.
Aside from federal and state government programs, you may be able to get hired at a company that helps employees pay off their loans, or you could encourage your current employer to add loan repayment to its benefits. As of 2019, more than 8% of companies provide student loan repayment assistance programs, or LRAPs, where the employer contributes a set amount of money each month to repay some of the employee's student loans.
And if you’re willing to play the long game, Safier said, another avenue for loan forgiveness is through income-driven repayment plans. Currently, the federal government offers four plans, all which lengthen your repayment term and reduce monthly payments to a small percentage of your adjusted gross income. Those programs include:
- Income-Based Repayment
- Income-Contingent Repayment
- Pay As You Earn (PAYE)
- Revised Pay As You Earn (REPAYE)
The qualifications for each program vary slightly, though REPAYE is the only plan that anyone with eligible federal loans can join, regardless of income or family size. Both PAYE and REPAYE cap payments at no more than 10% of income. After 20 or 25 years of payments, depending on the specific plan, the government will forgive any remaining balance.
“While this forgiven amount is typically treated as taxable income, it won’t be taxed until at least 2025, thanks to a provision in the American Rescue Plan,” Safier noted.
Wondering if you can double-up on student loan forgiveness? It is possible in certain situations, according to Kantrowitz. For example, borrowers can stack PSLF and Teacher Loan Forgiveness, but the same service years cannot count for both.
“So a borrower could pursue Teacher Loan Forgiveness for five years, followed by 10 years for PSLF,” he explained. “But, you can't pursue both simultaneously.”
Is Pursuing Student Loan Forgiveness Worth It?
While these loan forgiveness programs can help you get rid of your student debt, it can be challenging to stay on track, Safier says. “Most require years of qualifying work or repayment, so you might find yourself getting off track if you need to pause payments or switch jobs.”
Additionally, the majority of loan forgiveness programs only forgive federal student loans. So you might not find much relief if you owe a lot in private student loans.
But if you can qualify for some type of forgiveness, it’s certainly worth pursuing. Safier recommended spending some time researching all your options for loan forgiveness and repayment assistance to see if any programs match up with your specific circumstances. The Department of Education website is a good place to start if you have a lot of federal student loan debt.
“If you're more burdened by private loans, search for state-run or private loan assistance that may be able to offer some relief,” Safier says. You can check with your loan servicer and school’s financial aid office for guidance.
Also, be sure to thoroughly check that the forgiveness is legitimate, as there are scams out there (such as companies that require an upfront fee or guarantee immediate and total forgiveness). “But there are also legitimate options available, so explore your options so you don’t miss out on this valuable student loan relief,” she says.