The Biden administration discharged $5 billion worth of federal student loans in 2021 through a revamped forgiveness program, which made it easier for public servants to wipe out their student loan debt.
More than 70,000 borrowers qualified for the Public Service Loan Forgiveness program (PSLF) since President Joe Biden took office, the Department of Education announced in a Jan. 20 press release.
This limited PSLF waiver, which was put in place temporarily amid the coronavirus pandemic, also helped bring hundreds of thousands of borrowers closer to meeting the eligibility requirements for debt relief. Prior to the overhaul, about 98% of PSLF applications were rejected and just 16,000 borrowers had ever received a loan discharge in the program's history, the Education Department said.
Keep reading to learn more about the PSLF program to see if you're eligible for federal student loan cancellation. If you don't qualify, consider your alternative student loan repayment strategies like refinancing. You can compare student loan refinancing rates on Credible for free without impacting your credit score.
70K borrowers receive student loan relief through limited PSLF waiver
The Public Service Loan Forgiveness program allows public servants to discharge the remaining balance of their federal student loans after making payments on their debt for 10 years. In October 2021, the Biden administration overhauled the program to give borrowers credit for past periods of repayment that previously didn't count, which resulted in $5 billion worth of student loan discharges for 70,000 borrowers.
To qualify for PSLF, borrowers must meet the following eligibility requirements:
- Work full-time for a nonprofit organization or a federal, state, local or tribal government
- Have federal Direct Loans or move other federal loans into a Direct Consolidation Loan
- Make 120 qualifying payments under an income-driven repayment plan
This federal student loan repayment program is available to select teachers, nurses, government employees, military service members, lawyers and law enforcement personnel, as long as they work for a federal agency or in a nonprofit setting. If you believe you qualify, you'll have to verify detailed information of your employment history through employer certification.
You can see if you're eligible for this program using the PSLF Help Tool on the Federal Student Aid (FSA) website. Student loan borrowers who don't qualify for PSLF may consider alternative student debt repayment options, such as refinancing. Learn more about student loan refinancing by getting in touch with a knowledgeable loan expert at Credible.
Alternative student loan repayment plans if you don't qualify for forgiveness
While many student borrowers have qualified for forgiveness programs under the Biden administration, millions more still owe a collective $1.75 trillion worth of student loan debt, according to the Federal Reserve. Additionally, borrowers with private student loans don't qualify for federal debt relief measures. If you don't qualify for student loan relief, consider the following debt repayment strategies:
- Income-driven repayment plans (IDR). Federal student loan borrowers can enroll in an IDR plan to limit their monthly student loan payments to 10-20% of their discretionary income.
- Employer-assisted student loan repayment. Some companies will match contributions to your student loan payments, similar to a 401(k) matching program.
- Student loan refinancing. Refinancing to a private loan with a lower interest rate may help you lower your monthly payments, pay off debt faster and save money over the life of the loan.
It's important to note that refinancing federal loans into a private student loan will make you ineligible for certain government protections, such as IDR plans and select student loan forgiveness programs like PSLF. But if you don't plan on utilizing these benefits, it may be worthwhile to refinance for better terms while interest rates are near all-time lows.
A recent Credible analysis found that well-qualified borrowers who refinanced to a shorter-term student loan were able to save nearly $17,000, while those who refinanced to a longer-term loan reduced their monthly payments by more than $250 on average.
You can use a student loan refinancing calculator to determine if this debt payoff method is right for you. If so, visit Credible to begin the student loan refinancing process by comparing offers across multiple private lenders.
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