The Biden administration repaid $5 billion in federal student loans in 2021 through a revamped forgiveness program, which made it easier for officials to write off their student loan debt.
More than 70,000 borrowers have qualified for the Public Service Loan Forgiveness Program (PSLF) since President Joe Biden took office, the Department of Education announced in a Jan. 20 news release.
This limited PSLF waiver, which was put in place temporarily amid the coronavirus pandemic, has also helped bring hundreds of thousands of borrowers closer to meeting debt relief eligibility requirements. Prior to the overhaul, around 98% of PSLF applications were rejected and only 16,000 borrowers had ever received a loan discharge in the program’s history, the Department of Education said.
Keep reading to learn more about the PSLF program to see if you are eligible for federal student loan forgiveness. If you don’t qualify, consider other student loan repayment strategies like refinancing. You can compare student loan refinance rates on Credible for free without affecting your credit score.
$5.8B IN STUDENT DEBTS CANCELLED BY FULL AND PERMANENT DISABILITY EVACUATION
70,000 borrowers receive student loan relief through limited PSLF waiver
The Public Service Loan Forgiveness Program allows public servants to pay off 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 repayment periods that didn’t previously count, resulting in $5 billion in student loan repayments for 70,000 borrowers.
To be eligible for the PSLF, borrowers must meet the following eligibility conditions:
- Work full-time for a nonprofit organization or 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
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This federal student loan repayment program is available to certain teachers, nurses, government employees, military service members, attorneys and law enforcement personnel, as long as they work for a federal agency or in a nonprofit setting. If you think you qualify, you will need to verify detailed employment history information through an employer certification.
You can see if you are eligible for this program by using the PSLF Help Tool on the Federal Student Aid (FSA) website. Student borrowers who do not qualify for PSLF may consider other student debt repayment options, such as refinancing. Learn more about student loan refinancing by contacting a knowledgeable loan expert at Credible.
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Alternative student loan repayment plans if you don’t qualify for forgiveness
While many student borrowers qualified for forgiveness programs under the Biden administration, millions more still owe a collective debt of $1.75 trillion in student loans, according to the Federal Reserve. Additionally, borrowers with private student loans are not eligible for federal debt relief measures. If you don’t qualify for student loan relief, consider the following debt repayment strategies:
- Income-based 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.
- Repayment of a student loan with the help of the employer. Some companies will match contributions to your student loan payments, such as a 401(k) matching program.
- Student loan refinancing. Refinancing a private loan with a lower interest rate can help you lower your monthly payments, pay off debt faster, and save money over the life of the loan.
CAN AN INCOME-RELATED REPAYMENT (ICR) PLAN HELP GET MY STUDENT LOANS?
It is 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 certain student loan forgiveness programs like the PSLF. But if you don’t plan to use these benefits, it may be worth refinancing on better terms when interest rates are near their lowest levels.
A recent analysis by Credible found that qualified borrowers who refinanced a short-term student loan were able to save nearly $17,000, while those who refinanced a longer-term loan reduced their monthly payments by more than $250. $ on average.
You can use a student loan refinance calculator to determine if this method of paying off debt is right for you. If so, visit Credible to begin the student loan refinance process by comparing offers from several private lenders.
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