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Federal student loan forgiveness and cancellation guide

Federal student loan payment obligations resumed in October 2023. Here's what you need to know about where federal student loan forgiveness stands.

Federal student loan forgiveness guideStudent loan forgiveness has been a controversial topic over the past several years. In March 2020, the Biden Administration paused federal student loan payments to provide financial relief to borrowers during the COVID-19 pandemic. The pause in federal student loan payments was extended several times between 2022 and 2023.

Meanwhile, many legislators have pushed for more permanent solutions to ease the significant debt burden shouldered by more than 45 million Americans. Some believe alleviating Americans’ student loan debt is the right thing to do and will have a positive effect on the economy. Others feel that any kind of loan forgiveness is an example of government overreach and would be unfair to Americans who don’t have — or already repaid — student loans.

Wherever you stand on the issue, here’s a rundown of where federal student loan forgiveness and cancellation stands as we go into 2024.

Federal student loan payments resumed in October 2023

Interest on federal student loans began accruing interest again on September 1, 2023. Student loan payments became due again in October.

If you have not already resumed paying federal student loans or made other arrangements, you may now be in default. There are, however, still ways to find relief.

Biden’s student loan forgiveness plan status

In August 2022, President Biden announced that the federal government would forgive $10,000 in student loan debt for qualified borrowers making under $125,000 as a single filer or $250,000 as a household. Borrowers who received a Pell Grant could also qualify for another $10,000 in forgiveness.

By October 2022, as many as 16 million Americans qualified for Biden’s student loan forgiveness plan, but opponents of the plan began to sue the government.

In June 2023, the Supreme Court ruled that, under federal law, the President does not have the authority to cancel student loan debt.

Unfortunately, this means that Biden’s $400-million student loan forgiveness plan is dead. Even if you applied for and were approved for forgiveness under this program, you will not receive it and must continue to make student loan payments.

What is the SAVE plan?

Following the Supreme Court ruling, the Biden administration announced a new affordable repayment option called the Saving on a Valuable Education (SAVE) plan.

The SAVE plan is a new income-driven repayment plan that may reduce monthly student loan payments by as much as half and, in some cases, allow qualified borrowers to defer payments altogether.

  • Borrowers who earn less than 225% of the federal poverty level (equivalent to working full-time for about $15 an hour) will not have to make monthly loan payments.
  • Loan payments for undergraduate education will not exceed 5% of borrowers’ discretionary income.
  • Borrowers with beginning student loan balances of $12,000 or less will have their balances forgiven after 10 years of payments.
  • Borrowers won’t have to pay additional interest incurred by making reduced payments under the SAVE plan.

Although student loan payments resumed in October 2023, the reduced payments available under the SAVE plan will not begin until July 2024.

All federal student loan borrowers currently making payments will be eligible for the SAVE plan. If you are already enrolled in the Revised Pay as You Earn (REPAYE) plan, you will be enrolled in the SAVE plan automatically. You can learn more about the SAVE plan and your eligibility at the Department of Education’s income-driven repayment plan website and apply for the SAVE plan if you qualify.

Student loan relief announced in December 2023

In early December 2023, the Biden administration announced an additional $4.8 billion in student loan relief for over 80,000 borrowers. These discharges come after fixes to the income-driven repayment plan (IDR) and public service loan forgiveness (PSLF) programs.

Will recent student loan settlements affect me?

Aside from the Biden administration’s efforts to provide permanent cancellation of federal student loan debt, there have been several civil settlements that affect some borrowers with both federal and private student loans.

Recent civil settlements include:

  • $14.7 billion in debt relief for 1.1 million student loan borrowers whose colleges either closed abruptly or mislead students about borrowing costs or earning potential.
  • $130 million in debt relief for 7,400 borrowers who attended the defunct CollegeAmerica.
  • $6 billion in debt cancellation for students of 151 for-profit colleges and vocational training programs that misled students.

Eligible borrowers who attended one of the educational institutions covered by these settlements would have had to apply for a “borrower defense loan discharge” on or before June 22, 2022. If you are awaiting relief under one of these settlements you can visit the Federal Student Aid borrower defense status page to learn more.

Are more student loan forgiveness plans coming?

Following the Supreme Court decision that blocked Biden’s student loan cancellation plan, the Biden administration announced it was pursuing a new potential plan to cancel student loan debt under the Higher Education Act of 1965. Unfortunately, however, there hasn’t been much progress on since.

Income-driven repayment plans

In April 2022, the Department of Education said that it would provide assistance to borrowers who struggled to repay student loans under old income-driven repayment plans. This decision came following investigations that revealed the income-driven repayment plans had been poorly managed and sometimes left borrowers awaiting decisions and reduced payments for years.

It also said it would provide immediate debt cancellation for about 40,000 borrowers who qualified for Public Service Loan Forgiveness under revised guidelines. Borrowers who have a total or permanent disability are also eligible for discharge of their federal student loans The distribution of this relief is automatic; eligible borrowers should receive notification from their student loan service.

What if I don’t qualify for forgiveness or the SAVE plan?

For the majority of student loan borrowers who won’t qualify for forgiveness or relief, there is a one-year “on-ramp” period between Oct. 1, 2023 and Sep. 30, 2024. During this time borrowers who miss monthly payments will not be considered delinquent, reported to credit bureaus, placed in default or referred to collections agencies. Payments will still be due and interest will continue to accrue.

What about public service loan forgiveness (PSLF)?

Public service loan forgiveness is still available — and has been expanded. Public service loan forgiveness can cancel remaining federal student loan balances after the borrower makes a total of 120 loan payments (10 years’ worth). The loan payments do not need to be consecutive.

Eligible borrowers include:

  • Full-time employees of any federal, state, local or tribal government organization, including the military
  • Full-time employees of non-profits

To apply for public service loan forgiveness, you simply must submit a form via the Department of Education’s PSLF Help Tool.

What about private student loan forgiveness?

Unfortunately, student loan forgiveness only applies to federal student loans — no such option exists for private student loans. Any private student loans you have will need to be paid in full over the term of the loan.

Some private lenders offer their own income-driven repayment options and may work with borrowers on a case-by-case basis to reduce or defer payments.

Another option is to refinance your student loans. Refinancing may allow you to consolidate payments and reduce your monthly payment either by reducing your interest rate and/or extending the term of your loan. Although extending the loan term — the number of years over which you will repay the loan — will reduce your monthly payment, it will increase the amount of interest you pay over the life of the loan.

» MORE: The best student loan refinancing lenders

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