President Joe Biden isn’t done canceling student loans.
Here’s what you need to know — and how you can get your student loans canceled.
Biden has now canceled $17 billion of student loans, and he isn’t finished. As student loan borrowers eagerly wait for Biden to announce his decision on wide-scale student loan cancellation, there’s good news on the horizon. Biden has a clear playbook for canceling student loans. If you learn his strategy, you can get student loan forgiveness even if he doesn’t cancel everyone’s student loan debt.
Here are 3 ways that you can get student loan forgiveness:
1. Biden is focused on administrative fixes to existing student loan forgiveness
Biden is focused on fixing existing options for student loan forgiveness. That’s major news for student loan borrowers who have been frustrated by a broken student loan repayment system. By reducing paperwork, easing requirements and holding student loan servicers accountable, Biden is easing the path to student loan forgiveness so that more borrowers qualify. For example, Biden announced major changes to student loan forgiveness this week, which will help 3.6 million student loan borrowers get student loan relief. The Biden administration also has eliminated income requirements to get student loan forgiveness for borrowers with a total and permanent disability, while increasing the use of data matching with other federal agencies. The U.S. Department of Education is streamlining student loan forgiveness for student loan borrowers through public service loan forgiveness, income-driven repayment and borrower defense to repayment as well. The U.S. Department of Education also announced major changes to income-driven repayment, which allows student loan borrowers to count past student loan payments that previously were ineligible for student loan forgiveness. Now, student loan borrowers can get “credit” for these student loan payments, which means they could qualify for student loan forgiveness sooner.
2. Student loan forgiveness through income-driven repayment will become the norm
Biden wants more student loan borrowers to get student loan forgiveness through income-driven repayment. If you’re struggling financially, an income-driven repayment plan should be your preferred student loan repayment option for your federal student loans. Income-driven repayment plans such as IBR, PAYE, REPAYE and ICR set your monthly student loan payment as low as $0 based on your discretionary income and family size. Income-driven repayment plans are preferable to forbearance since the latter can result in student loan interestbeing added to your student loan balance. This not only makes your student loans have a higher balance but also increases your risk of student loan delinquency and student loan default. (Student loan relief: how to qualify for a “fresh start” on your student loans). Income-driven repayment plans also provide student loan forgiveness for your federal student loans after 20 years (undergraduate student loans) or 25 years (graduate student loans). This ensures that student loan borrowers aren’t stuck paying student loans forever. You can enroll in an income-driven repayment plan through your student loan servicer.
3. Biden prefers student loan borrowers to enroll in public service loan forgiveness
There’s a major push within the Biden administration to encourage more student loan borrowers to enroll in public service loan forgiveness. This program helps student loan borrowers get total student loan cancellation for their federal student loans. To qualify, you’ll need to work for a qualified public service or non-profit employer, make at least 120 monthly student loan payments while enrolled in an income-driven repayment plan and meet other requirements. Even if you don’t work for a public service or non-profit employer, now may be the time to consider a career change. With public service loan forgiveness, you can get student loan forgiveness in about half the time (10 years) compared to an income-driven repayment plan (20 years). Make sure to complete an Employer Certification Form with the U.S. Department of Education when you change jobs and at least annually to ensure that your employer qualifies. You may love your current job or never considered a career in public service. However, if you’re focused on student loan repayment and paying student loans faster, then you should strongly consider public service loan forgiveness.
As you consider the best ways to pay off student loans based on your financial goals and unique financial situation, make sure to consider all your options. This is especially important as temporary student loan relief will end August 31, 2022. Here are some smart strategies for student loan repayment:
- Student loan refinancing (lower interest rate + lower payment)
- Income-driven repayment (lower payment)
- Student loan forgiveness (federal student loans)