Federal Student Loan Repayment Resources, FAQs & News

In June of 2023, the Supreme Court made its ruling on student debt relief, blocking the Biden-Harris Student Loan Debt Relief Plan that would have provided up to $10,000 (and up to $20,000 for Pell Grant recipients) in loan forgiveness for each federal student loan borrower whose individual income was below $125,000 or household income was below $250,000.

The Department of Education (ED) still might be able to forgive loans on the basis of the Higher Education Act. An ED official explains what they hope to accomplish in this video.

Some people were eligible for loan forgiveness under Public Service Loan Forgiveness (PSLF) or the Borrower Defense rule but had not had their loans forgiven yet. The administration has reassessed these programs and some borrowers have had part or all of their loans forgiven. (Biden-Harris Administration to Provide Borrowers with Loan Forgiveness as Result of Fixes to Income Income-Driven Repayment Plans)

The Biden administration has announced three actions on student debt relief and loan repayment after the Supreme Court decision:

• A new debt relief program based on a different statute has been proposed. This involves a rulemaking process that normally takes a year or more, and it may be challenged in court.
• Saving on a Valuable Education (SAVE), a new income income-driven repayment (IDR) option that allows most borrowers to pay less each month, and some to pay nothing. SAVE replaces REPAYE, one of four existing IDR plans.
• 12-month “on-ramp” to repayment during which missed payments are not considered delinquent or reported to credit bureaus. Borrowers who can make payments should do so, as payments will be due and interest will accrue during this on-ramp period. At the time of publication, information about the 12-month on-ramp is limited, but we expect updates from Federal Student Aid (FSA) and the Department of Education in the coming months.

Most borrowers have a series of different loans disbursed at different times, often at different interest rates. Consolidation loans allow borrowers to combine one or more federal education loans into a single loan with a single payment.

• Consolidation could lower your monthly payment by providing access to additional income-driven repayment plans or by giving you more time to repay your loan
• Fixed interest rate
• Consolidating loans is necessary to qualify for the income-contingent repayment plan if you have a Parent PLUS loan.

• While your monthly payment may go down, you may have to pay longer, increasing your total interest
• Consolidating student loans can in some cases make it harder to access income-driven repayment plans like SAVE or loan forgiveness programs like Public Service Loan Forgiveness.
• Consolidating student loans with a private lender will generally render those loans ineligible for forgiveness and alternative repayment plans.

An income-driven repayment plan sets your monthly student loan payment to a percentage of your discretionary income. The amount is intended to be affordable based on your income and family size. This increases the amount of time it takes to pay off the loan. However, some IDR programs – particularly the SAVE plan – allow unpaid balances to be forgiven after a period of years in which the plan’s payment requirements are met.

Choosing the right plan is very important, as the wrong choice can cost thousands of dollars and years of lost credit towards forgiveness. As with so many areas of student loans, there’s no substitute for reading the fine print.

Existing Income-Driven Repayment options are described at this link, they include:

• Saving on a Valuable Education (SAVE) Plan – formerly Revised Pay As You Earn (REPAYE)
• Pay As You Earn (PAYE)
• Income Based Repayment (IBR)
• Income Contingent Repayment (ICR)

Borrowers currently enrolled in REPAYE will automatically be enrolled in SAVE, but borrowers in other IDR plans will need to login and request enrollment in SAVE if they are eligible.

The Department of Education has a loan simulator to compare repayment options. However, Parent PLUS borrowers must use Income-Contingent Repayment, described in the “Parent Borrowers*” section below.

Apply for Income-Driven Repayment here.

The Extended Repayment Plan allows borrowers to extend their repayment, for example, from ten years to twenty.

According to the Federal Student Aid 2023-24 Handbook:

• Undergraduates who are dependents of their parents can borrow $5,500 for their first year, $6,500 for their second year, and $7,500 for each of their third, fourth and fifth years, with an aggregate loan limit or total borrowing maximum of $31,000.
• Undergraduates who are independent from their parents can borrow $9,500, $10,500 and $12,500 for those years, up to a maximum of $57,500. (Note: getting classified as independent for these purposes is very hard to do before the age of 24.)

Graduate students can borrow up to $20,500 per year in direct loans up to a total of $138,500 including undergraduate debt.
Additionally, you can borrow up to the school’s Cost of Attendance with a Direct PLUS loan.

Private loans are market-driven, so how much you can borrow and on what terms is up to the lender.

• Private loans are very unlikely to be forgiven and generally do not have forbearance or income-driven repayment options.
• Depending on the loan origination fee and interest rate, at times, private loans can be cheaper than federal loans.
• This federal and private student loans comparison chart reviews some of the characteristics of and differences between private and federal loans

Some states offer student loan programs. Deferment, forbearance, payment terms, and potential forgiveness will depend on state law. Here are examples from Minnesota and Texas.

Maybe. Here are a few of the possibilities:

• The New Biden-Harris Debt Relief Plan. Details are TBD and will take over a year to develop because it needs to go through negotiated rulemaking. It will be very surprising if the new debt relief plan is not challenged in court.
• Saving on A Valuable Education (SAVE). The current version of SAVE reduces monthly payments and may result in some forgiveness for borrowers. More provisions of SAVE may be implemented in July 2024, which could further reduce or eliminate some payments.
• Public Service Loan Forgiveness (PSLF). Borrowers working in certain public and nonprofit jobs may qualify for student loan forgiveness after a period of repayment. Many loan balances have recently been forgiven under this program. These resources can be used to assess whether a borrower is eligible.
• Teacher Loan Forgiveness (TLF). Some teachers may be eligible for debt relief under this program.
• Teacher Education Assistance for College and Higher Education (TEACH) Grants. This program provides grants to those who qualify and fulfill a teaching service obligation, generally for four years. If a TEACH grant recipient doesn’t fulfill those requirements, the grant converts to a loan that must be repaid with interest. Aspiring teachers can apply for a TEACH grant of up to $3,772 per year.
• Borrower Defense to Repayment. Borrowers who went to a for-profit college and were misled or defrauded by that college may be eligible for debt relief.