While recent news has been a major step forward for overburdened borrowers seeking student loan forgiveness, it’s not a one-size-fits-all solution. Under President Biden’s plan, borrowers that meet specific income requirements can receive up to $10,000 in federal loan forgiveness or up to $20,000 for recipients of Pell Grants. But unfortunately, not everyone can qualify based on their individual or household income. You may wonder about your options if you’re ineligible for student loan forgiveness under Biden’s plan. Here’s what to know about the current forgiveness plan, plus some alternatives if you’re still burdened by student loan debt.
Who qualifies for student loan forgiveness?
In August, the President announced that student loan borrowers who make less than $125,000 as individuals or $250,000 as households qualify for the latest round of student loan forgiveness. If you qualify, you can get up to $10,000 in federal loan forgiveness or up to $20,000 if you receive a Pell Grant.
Do Private Student Loans Qualify for Forgiveness?
Since private student loans are issued by private lenders and not the federal government, these loans are ineligible for loan forgiveness. However, refinancing with a private student loan could still make sense if you can access an extended repayment term or lower your interest rate considerably. Doing so could also be useful if you’re looking to consolidate several student loan payments into one more manageable payment.
3 strategies if you don’t qualify for student loan forgiveness
Fortunately, if you don’t qualify for the latest round of student loan forgiveness, you might still have some options. Here are three strategies that might offer you some relief.
1. Talk with your lender
Talking with your lender should be your first step for those who aren’t eligible but are still overburdened by student loan debt. Discuss your options for lowering your interest rates or extending your repayment term to make your monthly payments more manageable. Several different repayment plans exist for federal loans, including the Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and income-based repayment. You may be surprised that you qualify for one besides the standard 10-year option. For more information about repayment plan options and eligibility requirements, visit StudentAid.gov.
2. Look into public student loan forgiveness
If you work in the public sector, you could be eligible for student loan forgiveness. Contact your company’s human resources department or research student loan forgiveness programs to learn about your options. The National Health Service Corp offers up to $50,000 in loan forgiveness for qualifying medical professionals.
- Public school teachers and staff members
- Law enforcement professionals
- Military service members
- Municipal, state, or federal employees
- Medical professionals
- Social workers at public agencies
3. Consider refinancing your loans
If you’re overwhelmed by multiple payments and high-interest rates, consolidating your student loans might be an option. Those with certain federal loans may be able to consolidate into one Direct Consolidation Loan to make it easier to manage payments. You might also consider refinancing with a private student loan if you have good credit and it makes sense for your situation. But this option is generally better for private student loan borrowers. Remember that if you refinance your federal student loans using a private loan, you could sacrifice certain benefits, such as the potential for future loan forgiveness.
Bottom Line
While only some student loan borrowers qualify for the latest round of federal forgiveness, it was a big step in student loan reform. And if you aren’t eligible right now, you could still have options. Talk with your lender about modifying your repayment plan, look into public and government student loan forgiveness, and consider refinancing your loans. These strategies could help you get some relief in situations where your student loans aren’t forgiven.
