If you want student loan forgiveness, do these 5 steps.
Here’s what you need to know.
With student loan relief from the Covid-19 pandemic ending imminently, student loan borrowers are scrambling to find ways to get student loan forgiveness. For the past 22 months, thanks to Congress, President Donald Trump and President Joe Biden, there have been no mandatory federal student loan payments, 0% interest rates on federal student loans, and no collection of student loans in default. However, with the expiration of student loan relief, many student loan borrowers need financial help. If you want student loan forgiveness, do these 5 steps.
1. Know there won’t be any wide-scale student loan forgiveness
If you’re hoping for mass student loan forgiveness soon, stop hoping. Why? There’s a low likelihood of wide-scale student loan cancellation in the near-term. Progressives in Congress have been campaigning on up to $50,000 of student loan forgiveness for student loan borrowers. However, Biden has shown no indication that he is seeking to cancel student loans for all or most student loan borrowers. (Here’s who qualifies for student loan forgiveness right now).While the U.S. Department of Education is considering mass student loan forgiveness among its cadre of ameliorative measures, Biden and the Education Department have focused on targeted student loan forgiveness. Could mass student loan forgiveness happen? Sure, but you should focus on other strategies for student loan repayment rather than expecting your student loans will get cancelled soon.
2. Check current options for student loan forgiveness
Biden has cancelled $11.5 billion of student loans since becoming president in January. That’s only the start, with billions of dollars more in student loan forgiveness expected. There are multiple ways to get student loan forgiveness. (How to apply for student loan forgiveness during the Biden administration). First, if you have a total and permanent disability, Biden cancelled $5.8 billion of student loans for these borrowers. Second, if you were misled by your college or university, your student loans could be partially or totally cancelled. Biden has cancelled $1.5 billion of these student loan borrowers. Third, if you’re pursuing public service loan forgiveness, Biden has cancelled $4.5 billion of student loans. (These borrowers don’t qualify for student loan forgiveness)
3. Get public service loan forgiveness
You can still get student loan forgiveness through the Public Service Loan Forgiveness program. This is an active program that is open to all federal student loan borrowers. How much student loan forgiveness can you get? Answer: all your federal student loans can get cancelled. The Education Department announced this month that $2 billion of student loans will be cancelled within weeks. To qualify, you’ll need to meet several requirements, including working full-time for a qualified public service or non-profit employer, make 120 monthly payments, and enroll in an income-driven repayment plan, among other requirements. The Biden administration made major changes to student loan forgiveness, which relaxed the rules significantly and makes it easier to get student loan forgiveness. That said, these changes are temporary, so if you’re pursuing public service loan forgiveness, make sure to complete a limited student loan forgiveness waiver before October 31, 2022. This way, you can count previously ineligible student loans and student loan payments to help you get student loan forgiveness faster. (Here’s how to apply for limited student loan forgiveness)
4. Get student loan forgiveness even if you don’t work in public service
So, if you don’t have a total and permanent disability, don’t qualify for borrower defense to repayment, or don’t work in public service, you may think that you won’t qualify for student loan forgiveness. Not necessarily. There are several other ways to get student loan forgiveness.
5. Refinance student loans
If you want student loan forgiveness, student loan refinancing may be a smart option for you. With student loan refinancing, you can get a lower interest rate, lower monthly payment, or both. Student loan refinancing rates are incredibly low, and start at 1.74%.
This student loan refinancing calculator shows you how much you can save with student loan refinancing.
For example, let’s assume you have $70,000 of student loans with a 7% interest rate and 10-year repayment term. If you refinance at a 2.5% interest rate and 10-year repayment term, you could save $153 each month and $18,344 total.
You can refinance private or federal student loans, or both. You can choose a fixed or variable rate, and choose a student loan repayment term from 5-20 years. While you won’t get immediate “student loan forgiveness,” you can save thousands of dollars or tens of thousands of dollars over the life of your loan through savings in interest. To qualify, you’ll need a credit score of at least 650, stable income, be employed or have a signed job offer, and a low debt-to-income ratio. Student loan refinancing of federal debt is not for everyone, however, if you think you’ll need federal loan benefits such as federal student loan forgiveness, forbearance or deferment, for example. Why? Through refinancing, your federal debt becomes private debt and these federal benefits won’t be available. So, you could refinance private debt only. Alternatively, you may not need these federal programs or prefer a lower rate to save more money, so in that case, you could choose to refinance both private and federal loans.
As you navigate strategies for student loan repayment, make sure you understand all your options. Here are a few smart places to start to save money on your student loans: