All You Need to Know about Student Loan Relief

If you have federal debt from funding your college education, there are ways to reduce or eliminate what you owe.

Start by understanding the type of debt you have, the available options, and the resources you qualify for to receive student loan relief.

What is student loan relief?

Student loan relief, also known as student debt relief, refers to a range of solutions designed to help reduce or eliminate your debt if you have a William D. Ford Federal Direct Loan (Direct Loan) or, in some cases, a Federal Family Education Loan (FFEL). These relief options vary based on eligibility, coverage, and other factors.

Types of student loan relief

Student loan cancellation

Student loan cancellation refers to the elimination of the remaining balance of your student debt. This term is often associated with the Perkins Loan Program, which provided loans to students with financial need but was discontinued in 2017. If you held a Perkins Loan and worked in a qualifying government or non-profit position, you may be eligible to have the remaining balance canceled.

Eligible jobs for Perkins Loan cancellations include:

• First responders
• Health care workers
• Teachers
• Volunteers in programs like AmeriCorps or the Peace Corps

To check your eligibility for a Perkins Loan cancellation, reach out to the school that issued the loan or contact the loan servicer associated with that institution.

Student loan discharge

Student loan discharge is a process similar to cancellation or forgiveness, aimed at reducing or eliminating your debt due to circumstances beyond your control. Discharge may be granted under specific conditions, including:

• Borrower Defense Loan Discharge: If you enrolled in a school based on misleading or false information.
• Disability Discharge: If you can provide documentation proving permanent or total disability from the U.S. Department of Veterans Affairs, the Social Security Administration, or an authorized medical professional.
• Discharge Due to Bankruptcy: Under certain circumstances, bankruptcy can lead to the discharge of student debt.
• Discharge Due to Death: If you pass away, or if a student financed through a parent PLUS loan dies.
• School Closure: If your school closed while you were enrolled or within 180 days of your approved withdrawal.

Student loan forgiveness

Student loan forgiveness means that under certain conditions, your loan may be eliminated. One of the most common forms of forgiveness is the Public Service Loan Forgiveness (PSLF) program.

To qualify for PSLF, you must:

• Make 120 qualifying loan payments (typically over 10 years)
• Work or have worked in public service roles, such as in state or federal government, the military, or certain nonprofit organizations.

The U.S. Department of Education provides a PSLF Help Tool to help determine your eligibility.

Other forgiveness options include:

• Medical school forgiveness programs
• Military loan forgiveness
• Nurse Corps loan repayment program
• Teacher loan forgiveness

Loan deferment and forbearance

When you apply for a deferment or forbearance, you’re not eliminating your loan; instead, you’re temporarily pausing your payments. This option is typically used during financial hardships or health issues that make timely payments difficult.

While “deferment” and “forbearance” are often used interchangeably, they have key differences:

• Eligibility: Deferment has specific requirements, whereas forbearance is at the discretion of your loan servicer.
• Interest Accrual: Interest may continue to accumulate during forbearance, but some types of deferment can pause interest.
• Duration: Forbearance periods typically last for 12 months, while deferments can extend for several years.

Types of deferment or forbearance programs include:

• Cancer treatment deferment
• Economic hardship
• In-school deferment
• Military service and post-active duty service deferment
• Parent PLUS borrower deferment
• Student loan debt forbearance
• Unemployment deferment

To apply for deferral or forbearance, contact your federal loan servicer.

What to consider when looking for student loan relief

Applying for student loan relief is an important first step, but it’s crucial to keep making payments while your application is under review. Stopping payments could lead to issues like a damaged credit score.

Be cautious of scams in the student loan relief space. While there are reputable companies, others may not have your best interests in mind. Watch for warning signs such as:

• Requesting you to sign a power of attorney
• Promising immediate loan forgiveness
• Asking for your FSA ID password
• Demanding upfront payment before providing services
• Presenting fake Department of Education credentials

If you notice any of these red flags, it’s best to move on. Report suspected scams to your student loan servicer, the Federal Trade Commission, or your state’s attorney general.

Biden-Harris student debt relief

Since taking office, President Joe Biden has prioritized student debt relief, despite facing challenges, including a 2023 U.S. Supreme Court ruling against his one-time loan forgiveness initiative. Nonetheless, the administration has identified alternative pathways to assist borrowers.

In August 2023, the Biden-Harris Administration introduced the Saving on a Valuable Education (SAVE) Plan, an income-driven repayment program that replaced the previous Revised Pay As You Earn (REPAYE) Plan. Key benefits of the SAVE Plan include:

• Raising the income exemption from 150% to 225% of the poverty line.
• Eliminating 100% of remaining monthly interest after borrowers make a full, on-time payment.

If you were previously on the REPAYE Plan, you were automatically transitioned to the new SAVE Plan.

In late May 2024, the administration announced the cancellation of an additional 160,000 student loans through various existing programs, totaling $7.7 billion in federal student loan relief. This relief will benefit:

• 54,000 borrowers enrolled in the new IDR (SAVE Plan)
• 39,000 in earlier income-driven plans
• 67,000 through the Public Service Loan Forgiveness (PSLF) program

For the latest updates on these initiatives and to check your eligibility, visit the Federal Student Aid website.

Other options for student debt relief

The options mentioned earlier apply to federal loans, but if you’re financing your education with private loans or don’t qualify for any student debt relief programs, you still have alternatives to consider:

• Deferment or Forbearance: Like federal loans, deferment or forbearance can temporarily pause your payments on private student loans. Keep in mind that interest continues to accrue during forbearance, and neither option is a long-term fix, as you may end up paying more once the deferment or forbearance period ends.
• Refinancing: If you have good credit or a reliable co-signer, refinancing could allow you to consolidate multiple loans at a lower interest rate. However, be aware that refinancing federal loans may mean losing certain benefits and protections associated with them.
• Talk to Your Lender: If you’re having trouble repaying a private loan, reach out to your loan servicer. They may provide options such as temporarily lowering your payments or switching to an interest-only repayment plan.

In Conclusion

Although your student debt may feel overwhelming, there are solutions to help reduce or eliminate your payments. Depending on your loan type, profession, and eligibility criteria, you might qualify for specific debt relief programs.

Begin by researching your options or reaching out to your loan servicer. Understand the details of your loan and your employment situation. With this information, you can take the first steps toward alleviating your student debt.