Student loan debt is a major financial burden for millions of Americans, and student loan cancellation has been a hot topic in recent years. While some loan forgiveness programs already exist, broad student loan cancellation has faced political and legal challenges.
This guide breaks down the current status of student loan cancellation, what programs are available, and what borrowers can realistically expect.
1. What is Student Loan Cancellation?
Student loan cancellation refers to erasing some or all of a borrower’s student debt, either through government action or existing loan forgiveness programs.
There are two main types of loan cancellation:
- Broad Student Loan Cancellation: A government-wide program that cancels debt for all or most borrowers.
- Targeted Loan Forgiveness Programs: Existing programs that cancel loans for specific groups (e.g., public service workers, teachers).
🚀 Key Takeaway: While broad cancellation is debated, many borrowers qualify for existing loan forgiveness programs.
2. What Happened to Biden’s Student Loan Forgiveness Plan?
In 2022, President Joe Biden proposed a plan to cancel up to $20,000 in federal student loans per borrower.
✔ $10,000 canceled for borrowers earning less than $125,000 per year ($250,000 for couples).
✔ $20,000 canceled for Pell Grant recipients.
However, in June 2023, the Supreme Court struck down Biden’s plan, ruling that the executive branch did not have the authority to cancel loans on a large scale without congressional approval.
Biden’s Alternative Approach
After the Supreme Court ruling, the Biden administration introduced a new strategy for targeted loan relief:
✔ Expanding existing forgiveness programs (like Public Service Loan Forgiveness).
✔ Introducing the SAVE Plan (a new income-driven repayment plan with forgiveness benefits).
✔ Exploring new legal pathways for cancellation through the Higher Education Act.
🚀 Key Takeaway: Broad loan forgiveness is currently blocked, but targeted relief is still available.
3. Who Qualifies for Student Loan Forgiveness Now?
Even though broad cancellation is uncertain, several existing programs offer student loan forgiveness.
1. Public Service Loan Forgiveness (PSLF)
✔ Forgives remaining student debt after 10 years (120 qualifying payments).
✔ Available to government and nonprofit workers (teachers, nurses, military, etc.).
✔ Requires enrollment in an income-driven repayment (IDR) plan.
🚀 How to Apply: Submit an Employment Certification Form annually at studentaid.gov.
2. Income-Driven Repayment (IDR) Forgiveness
✔ Forgives student loan balances after 20-25 years of qualifying payments.
✔ Available under IDR plans like SAVE, PAYE, and IBR.
✔ The new SAVE Plan reduces monthly payments and speeds up forgiveness for lower balances.
🚀 How to Apply: Enroll in an IDR plan at studentaid.gov.
3. Teacher Loan Forgiveness
✔ Forgives up to $17,500 for teachers in low-income schools after 5 years of service.
🚀 How to Apply: Submit the Teacher Loan Forgiveness Application after 5 years of teaching.
4. Perkins Loan Cancellation
✔ Forgives up to 100% of Perkins Loans over 5 years for public service workers (teachers, nurses, law enforcement).
🚀 How to Apply: Contact your loan servicer or school’s financial aid office.
5. State and Profession-Based Loan Forgiveness
✔ Some states offer loan repayment assistance for doctors, lawyers, and other professionals in high-need areas.
🚀 How to Apply: Check your state’s higher education agency for eligibility.
4. What About Private Student Loans?
Unfortunately, private student loans are NOT eligible for federal forgiveness programs. However, private borrowers can:
✔ Refinance for a lower interest rate if they have good credit.
✔ Look for employer loan repayment assistance programs.
✔ Consider repayment assistance from state programs.
🚀 Key Takeaway: If you have private loans, refinancing or employer benefits are your best options.
5. The Future of Student Loan Cancellation: What’s Next?
While broad student loan cancellation is uncertain, targeted relief efforts continue. Possible future changes include:
✔ Expanding PSLF and IDR programs.
✔ New forgiveness programs through the Higher Education Act.
✔ More state-based loan repayment programs.
🚀 Key Takeaway: Borrowers should focus on existing forgiveness programs rather than waiting for broad cancellation.
6. What Should Borrowers Do Now?
1. Check If You Qualify for Loan Forgiveness
- Apply for PSLF if you work in public service.
- Enroll in an IDR plan for long-term forgiveness.
2. Explore Repayment Options
- Consider the SAVE Plan to lower payments.
- Refinance private loans if you qualify for a lower interest rate.
3. Stay Updated on New Policies
- Visit studentaid.gov for the latest changes.
💡 Final Tip: Don’t wait for broad cancellation—apply for forgiveness programs you qualify for now. 🚀
