A revamped student loan forgiveness program launched by the Biden administration in 2021 allows the government to write off $5 billion in federal student loan debt, according to a report by FOX10.
Public Service Loan Forgiveness (PSLF) has qualified more than 70,000 borrowers since President Biden assumed office, the Department of Education stated in a Jan. 20 press release.
The temporary waiver also helped hundreds of thousands of borrowers meet the debt relief eligibility requirements during the pandemic.
Approximately 98% of PSLF applications were rejected and only 16,000 borrowers were discharged from their loans, the Education Department said.
Find out if you’re eligible for a federal student loan cancellation by reading more about the PSLF program. As a backup plan in the event that you don’t qualify, you may want to consider refinancing your student loan. Credible offers free and no-cost student loan refinancing rates without affecting credit scores.
Limited PSLF Waiver Relief to Over 70k Borrowers
For public servants who have paid their federal student loans for 10 years, the Public Service Loan Forgiveness program allows them to discharge the remaining balance.
By October 2021, the Biden administration redesigned the program to allow borrowers to receive credits for past repayments that previously weren’t considered, resulting in $5 billion in student loan discharges for 70,000 borrowers.
The following eligibility requirements must be met by borrowers to qualify for PSLF:
- Working for a nonprofit organization or a government agency on the federal, state, local or tribal levels
- Consolidate federal loans with direct consolidation loans or have federal Direct Loans
- Carry out 120 qualifying payments under an income-driven repayment plan
Teachers, nurses, government employees, military personnel, lawyers, and law enforcement officers can apply to this federal student loan repayment program if they work for a federal agency or non-profit organization.
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Your employment history must be verified through employer certification if you believe you qualify.
The PSLF Help Tool can help you determine whether you’re eligible for this program on the Federal Student Aid (FSA) website.
Alternative student loan repayment options, such as refinancing, are available to borrowers who do not qualify for PSLF.
Alternative Student Loan Repayment Plans If You Don’t Qualify For Forgiveness
According to the Federal Reserve, the Biden administration has provided forgiveness programs to many student borrowers, but millions of students still owe $1.75 trillion worth of student loan debt.
Additionally, borrowers with private student loans are not eligible for federal debt relief programs.
Nonetheless, consider the following debt repayment strategies if you don’t qualify for student loan forgiveness:
- Income-driven Repayment Plans (IDR). An IDR plan allows federal student loan debtors to limit their student loan payments to 10-20% of their discretionary income.
- Employer-assisted Student Loan Repayment: Employers sometimes match your contributions to student loans payments, much like a 401(k) program.
- Student Loan Refinancing: Refinancing to a private loan may reduce your monthly payments, pay off debt more quickly, and save you money in the long run.
You will not be eligible for certain government protections if you refinance federal loans into private student loans. This includes IDR plans and some student loan forgiveness programs like PSLF.
It may still be a good idea to refinance for better terms even if you don’t plan on using these benefits.
A recent Credible analysis revealed that borrowers who refinanced to a shorter-term student loan saved more than $17,000, while borrowers who refinanced to a longer-term loan saved more than $250 on average monthly.
Make use of a student loan refinancing calculator to determine if this is the right debt repayment option for you.
Interestingly, experts at Credible can help you begin the student loan refinancing process by comparing offers from a variety of private lenders.
