In 2023, the Supreme Court overturned President Biden’s plan to forgive student loans once. This was devastating for millions of borrowers. Biden is still trying to find ways of offering relief to those who repay federal student loans. Biden’s administration announced last week that the government service loan forgiveness program (PSLF) would cancel $5,8 billion of student loan debt for 78,000 borrowers.
The White House announced Biden had canceled $1.2B in federal student loans for over 153,000 student loan borrowers on Feb. 21. These borrowers have been enrolled for the Saving on a Valuable Education plan (SAVE), borrowed less than $12,000 in federal student loans and are in repayment.
The Department of Education has also announced that it will reach out to those borrowers who qualify for early relief and are not currently in the SAVE Plan by the end of February. There may be ways to reduce or eliminate federal student loans if they were not affected by the latest round of loan forgiveness.
Federal Loan Repayment Programs
The federal loan forgiveness program is for existing borrowers who have earned forgiveness due to their employment or payment histories. Currently, four programs are active: IDR (Income-Driven Repayment): Borrowers who are enrolled in the IDR plan have a balance of debt at the end of the 20- or 25 years of loan term. The government forgives that amount. Save, the most current IDR plan calculates monthly payments according to your income and your family size.
SAVE offers lower payments to almost all borrowers than other IDR programs because repayment amounts are calculated based on a smaller percentage of gross adjusted income. Some SAVE enrollees may be able to reach forgiveness within 10 years of borrowing federal student loan amounts of less than $12,000. Perkins Loan forgiveness: Borrowers of Perkins Loans may qualify for a loan forgiveness of up to 100% based on employment.
Teachers, first responders, and certain volunteer workers may be eligible. Public Service Lending Forgiveness (PSLF).PSLF, or Public Service Loan forgiveness, is a program that offers loan forgiveness to employees of nonprofits and government agencies who have served in public service for at least ten years and made 120 payments per month. PSLF allows payments under IDR plans to qualify. Teacher’s Loan Forgiveness: Teachers who teach in low-income schools are eligible for a loan forgiveness of up to $17.500 after serving five years. Is Student Loan Forgiveness Taxable? What You Need to Know
Borrowers participating in Income-Driven Repayment
If you have federally-backed Direct Loans, enrolling in the IDR plan will reduce your monthly payment. You can also get rid of any remaining debt at the end of the new loan term. If you currently have Federal Family Education Loans (FFELs), Parent PLUS Loans or Perkins Loans, you will not be eligible for IDR relief. Consolidating your federal Direct Consolidation Loans may allow you to qualify for IDR forgiveness. Important Borrowers who work toward forgiveness via IDR or PSLF may be eligible to receive a one-time adjustment in payment count.
This adjustment counts payments retroactively that were previously not eligible, which brings millions of people to the threshold for forgiveness. This adjustment is completed automatically for the majority of people. Borrowers must consolidate debts by April 30, 2024, if they have private FFEL Loans.
If you’re a secondary or elementary school teacher, there are several programs that you might be eligible for. Student Loan Forgiveness You may qualify for the Teacher Loan forgiveness program if your teaching experience is five years full-time and consecutively at a school or education agency that qualifies for low-income.
The amount of forgiveness varies depending on your subject but ranges between $5,000 and $17.500. Perkins Loan forgiveness: If a teacher is employed in an elementary or secondary public or nonprofit school, they can receive a portion of their debt forgiven each year up to a maximum of 100%.
PSL: You don’t have to be a teacher in a public school. If you are employed for 10 consecutive years by a qualified employer and have made 120 qualifying payments per month, your remaining loan balance will be forgiven.
Military personnel and first responders If you have served as a U.S. Armed Forces officer, firefighter, or in law enforcement, you could be eligible for one of the following programs that forgive your student loans: Perkins Lending Forgiveness Firefighters & Law Enforcement Officers may receive up to 100 percent of their outstanding Perkins Loans after serving for five years.
Military personnel can have up to 100 percent of their loans forgiven after five years of service if their active duty service included or began after August 14, 2008. They must have worked at least ten years full-time, making 120 monthly payments.
Public servants and employees of the government
Perkins Loan Forgiveness, PSLF, is available for public servants such as public defenders/prosecutors, public library librarians and emergency managers. Perkins Repayment: Public service workers who have served for at least five years can be eligible for forgiveness of up to 100% of their loan.
Nonprofit organization employees
PSLF is open to anyone who works for a charitable organization. PSLF does not care about your role. Even if it isn’t one that directly serves the public, such as a gardener, accountant, marketing professional, or chef, you could qualify. PSLF eligibility depends on the status of your employer rather than your role. You may qualify for loan cancellation after working full-time for at least ten years and making 120 qualifying repayments. It is not necessary to work with the same organization for the full 10 years.
Healthcare workers Perkins: Full-time nurses and medical technicians who provide early intervention services to the disabled, as well as speech pathologists, are eligible for forgiveness of 100% up to five years after service. PSLFPhysicians. Nurses. Medical Technicians. Healthcare Administrators can all qualify for PSLF as long as they are working full-time in a hospital, clinic, university or nonprofit organization.
AmeriCorps or Peace Corps volunteers
Perkins Loan Forgiveness may be available if you served as a volunteer through AmeriCorps. Perkins Loan Forgiveness removes a percentage from your debt per year of service. First-year eligible service: 15% off of outstanding debt.
Loan discharge programs: If you are employed or make payments towards your debt, then you can qualify for loan forgiveness. Some circumstances, like a disability or the closure of a school, can lead to a discharged student loan. Loan types vary in terms of how much you can forgive, as well as the conditions that qualify.
Bankruptcy Repayment: The court may decide that repaying loans would result in undue hardship if you declare bankruptcy and file an adversary proceeding action, which is a lawsuit asking the court to decide on a certain issue. If so, the loan will be discharged. Borrower Defense: If a Direct Loan borrower took out a loan to attend college and the college misled him or engaged in misconduct such as breaking federal or state law, he may be entitled to Borrower Defense.
Discharge for Closed Schools: If your college closed when you were attending school or within 182 days of the date of withdrawal, you may qualify to receive a discharge of up to 100% of your loan.
Death Repayment: If a student or you who took out a PLUS Loan in your name dies before you do, then the balance of the loan is repaid.
False Certification Discharge: When a school certifies that you are eligible for loans when, in fact, you do not have a diploma or a certificate, you can get your debts discharged.
Discharge on Total and Permanent Disability: If your disability is total and permanent, you can get up to 100 percent of your federal loan.
