The COVID-19 student loan payment pause bought millions of Americans a temporary reprieve from crippling debt payments, but that came to an end this month. Many Americans now have little choice but to make room in their budget for another bill. However, the Biden Administration is taking steps to provide much-needed relief to as many borrowers as it can.
The administration just announced an additional $9 billion in student loan debt relief that should help an additional 125,000 borrowers. This brings its total approved debt cancellation to $127 billion for close to 3.6 million Americans. Here's how to find out if you're one of them.
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Who qualifies for the latest student loan debt relief?
This latest student loan debt relief applies to three groups of borrowers. Here's what the breakdown looks like:
- $5.2 billion going to approximately 53,000 borrowers under Public Service Loan Forgiveness (PSLF) programs
- $2.8 billion for 51,000 borrowers on income-driven repayment (IDR) plans who made 20 or more years of payments but never got the relief they were entitled to
- $1.2 billion to 22,000 borrowers who have a total or permanent disability as identified by a data match with the Social Security Administration
Contact your student loan servicer if you have any questions about whether you qualify for student loan debt relief under any of these conditions.
It's worth pointing out that this debt relief only applies to federal student loans. The government cannot cancel private student loans offered by other lenders, as it lacks the authority to do so. Those with private student loan debt or federal student loan debt not forgiven under one of the conditions above will have to come up with an alternate plan for repaying their debts.
What do you do if you still have student loan debt?
Though student loan debt forgiveness may be beyond reach for many borrowers, there are other ways to reduce your monthly payments or pay your debt off more quickly. But your approach depends on what type of loan you have.
Those with private student loans have fewer options, as these loans typically have less favorable repayment terms than federal student loans. Refinancing your loans when rates are low can help you pay less overall or reduce your monthly payments. However, there will be closing costs associated with this. If you don't want to try refinancing, reach out to your lender to see what kind of support it can offer you to help you keep up with your payments.
People with federal student loans have more options. There's the new SAVE income-driven repayment plan. It's an improvement on previous IDR plans that prevents your balance from growing due to interest charges as long as you make a full monthly payment. It can also significantly reduce the monthly payment for most borrowers. You can learn more and apply on the Department of Education website.
The government's Fresh Start program also provides much-needed assistance to those who have defaulted on their student loan debt. Some benefits are available to all qualifying borrowers right away, but those who hope to take full advantage of its perks must formally sign up by September 2024.
Some student loan borrowers may also be able to seek support from their employers. Debt repayment assistance isn't the most common perk, but some companies are willing to chip in to help their employees get free of this burden.
Your path to student loan debt repayment will likely be different from anyone else's. The best thing you can do is explore all your options before deciding on a plan. Keep your eyes peeled for additional student loan debt relief as well. You never know when a better payment plan or a favorable law could throw you a lifeline.
