- The Real Impact of Student Loan Debt
- How Did We Get Here?
- So What Are Your Options?
- Options for Student Loan Forgiveness
- Public Service Loan Forgiveness (PSLF)
- Income-Driven Repayment (IDR) Plans
- Current Policy Environment
- What Borrowers Can Do
- Pay As You Earn (PAYE) Forgiveness
- REPAYE / SAVE Plan Forgiveness
- Income-Contingent Repayment (ICR) Forgiveness
- Federal Perkins Loan Cancellation and Discharge
- Occupation-Specific Loan Forgiveness Programs
- None of These Apply To You
- To Sum It Up
Millions of Americans are weighed down by student loan debt—but some may qualify for relief without even realizing it. Read on to find out if you’re eligible for student loan forgiveness and how to claim it.
The Real Impact of Student Loan Debt
Approximately 42.7 million Americans have student loan debt, totaling about $1.77 trillion—significantly more than the $1.21 trillion in credit card debt. Around 11% of borrowers default or are behind on payments. This debt affects immediate finances and long-term goals like retirement savings and homeownership. Achieving financial stability becomes more challenging when a large portion of your income goes toward student loans. For practical strategies for managing your loans, visit this guide.
Rising student debt makes it harder for people to buy homes. For every $1,000 more in loans, homeownership becomes less likely. High debt levels also force many to delay retirement until their early to mid-70s, meaning they’ll have to work longer than previous generations.
How Did We Get Here?
- Higher tuition costs: College has become much more expensive over the years.
- More students enrolling: College attendance has increased across the board.
- More borrowing per student: Many students are taking out larger loans to cover costs.
- Slow wage growth: Income after graduation hasn’t kept pace with education costs.
Why College Costs So Much
Let’s put this in perspective. Since 1980, college costs have surged by about 169% after adjusting for inflation, while new car prices only rose 22%. If cars had increased at the same rate as tuition, a new vehicle today would cost over $90,000. This steep rise didn’t happen overnight—several long-term factors have pushed college costs higher and enrollment patterns have shifted as a result.
- Rising demand: College enrollment rose sharply from the 1990s through the early 2010s, stretching available resources.
- Falling public funding: Many states cut higher ed budgets, forcing schools to raise tuition and shift more costs to families.
- Economic pressures: Inflation and slower wage growth have made it harder for families to afford rising tuition.
- Changing demographics: A declining college-aged population is expected to reduce enrollment in the coming years.
Congress Changed the Rules
Before 1976, student loans could be discharged in bankruptcy just like credit card or medical debt. But that changed with a series of legislative reforms starting in 1976 and 1978, which required borrowers to prove “undue hardship.” By 1984, it became nearly impossible to have student loan debt wiped out through bankruptcy.
These changes made lenders more confident and aggressive, knowing they’d almost always get paid back. The ripple effects have raised concerns about the broader economy:
- Loan risk shifted to borrowers: With limited bankruptcy protection, students—not lenders—shouldered the financial risk.
- Parallels to the housing crisis: Like subprime mortgages, easy lending, and high balances sparked fears of a long-term economic drag.
- Impact on spending and homeownership: Heavy debt burdens can delay milestones like buying a home or saving for retirement.
- Pandemic pause insights: When payments were paused during COVID-19, many borrowers boosted spending and savings—showing how debt relief can free up economic activity.
While student debt may not trigger a systemic crash like the mortgage crisis, its long-term effects on financial health and the economy remain a major concern.
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So What Are Your Options?
Options for Student Loan Forgiveness
Due to recent legal challenges and administrative changes, student loan borrowers face significant uncertainty.
Public Service Loan Forgiveness (PSLF) remains available for those in qualifying government or nonprofit roles.
Income-Driven Repayment (IDR) plans, including the SAVE Plan, also offer long-term forgiveness—though major updates have impacted access. Check StudentAid.gov regularly for the latest developments.
Public Service Loan Forgiveness (PSLF)
PSLF remains active, offering loan forgiveness after 10 years of qualifying payments for borrowers working full-time in public service roles.
Who Is Eligible?
- Full-time employees of government agencies, 501(c)(3) nonprofits, and qualifying public service organizations
- As of March 8, 2025, eligibility may be restricted for organizations deemed to have “substantial illegal purposes” under a new executive order
Eligible Loans
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans
- Direct Consolidation Loans
How to Apply
Submit an Employment Certification Form annually using the PSLF Help Tool to track qualifying payments.
Income-Driven Repayment (IDR) Plans
IDR plans set monthly payments based on income and family size, with forgiveness after 20–25 years of payments. However, applications are paused as of March 2025 due to legal orders affecting the SAVE Plan and other IDR options.
Available IDR Plans
- Income-Based Repayment (IBR): Forgiveness after 20 or 25 years
- Pay As You Earn (PAYE): Forgiveness after 20 years; must show partial financial hardship
- Income-Contingent Repayment (ICR): Forgiveness after 25 years; payments capped at 20%
- SAVE (formerly REPAYE): Forgiveness after 20 years (undergrad) or 25 years (grad); applications paused due to court ruling
Key Considerations
- Recertification deadlines extended through at least February 2026 for many SAVE borrowers
- Forgiven loan amounts may be taxable depending on future IRS guidance
- All online IDR applications are currently paused
Current Policy Environment
Recent actions have created major disruption to federal loan forgiveness programs. Borrowers should stay informed and document all communications with loan servicers.
- Federal courts have blocked key portions of the SAVE Plan, halting new IDR enrollments
- The Department of Education has suspended online application processing for all IDR plans
- Borrowers in SAVE have had payments paused but forbearance may end December 2025
- The March 2025 executive order may exclude certain nonprofits from PSLF eligibility
- The American Federation of Teachers (AFT) has filed a legal challenge against the IDR pause
- Borrowers have reported unexpected payment increases or loss of eligibility due to these disruptions
What Borrowers Can Do
- Visit StudentAid.gov regularly for updates and revised instructions
- If unable to apply or recertify, consider requesting forbearance or deferment through your loan servicer
- Keep records of all qualifying PSLF payments and submit annual certifications even during pauses
- Explore alternative repayment strategies like graduated or extended plans during legal delays
- Ensure your contact info is current with your loan servicer to receive critical updates
- Submit paper applications (PDF) for IDR plans while digital tools remain unavailable
The policy landscape is rapidly evolving. Borrowers should remain proactive and seek official guidance to protect their forgiveness progress and repayment options.
Pay As You Earn (PAYE) Forgiveness
PAYE limits your student loan payments to 10% of your discretionary income. Borrowers who make on-time payments for 20 years may have their remaining loan balance forgiven. This plan especially benefits those with lower incomes relative to their debt.
Who Is Eligible?
To qualify, your calculated PAYE payment must be lower than what it would be under a Standard Repayment Plan. You must also demonstrate partial financial hardship.
Eligible Loans
- Direct Subsidized and Unsubsidized Loans
- Direct Grad PLUS Loans
- Consolidated Subsidized and Unsubsidized FFEL Stafford Loans
- Consolidated FFEL Loans made to graduate students
- Consolidated Federal Perkins Loans
- Direct Consolidation Loans, unless they repaid Parent PLUS Loans or FFEL Loans made to parents
How to Apply
Apply through StudentAid.gov or request an application from your loan servicer. You may need to provide documentation such as tax returns and pay stubs.
REPAYE / SAVE Plan Forgiveness
REPAYE, now known as the SAVE Plan, caps monthly payments at 10% of discretionary income. Undergraduate loans are forgiven after 20 years of payments, while graduate loans are forgiven after 25 years. Unlike PAYE and IBR, there is no income eligibility requirement for enrollment.
Who Is Eligible?
All borrowers with eligible federal loans are eligible for REPAYE / SAVE, regardless of income level.
Eligible Loans
- Direct Subsidized and Unsubsidized Loans
- Direct Grad PLUS Loans
- Consolidated FFEL Stafford Loans
- Consolidated FFEL PLUS Loans made to graduate students
- Consolidated Federal Perkins Loans
- Direct Consolidation Loans, unless they repaid Parent PLUS Loans or FFEL Loans made to parents
How to Apply
Submit your application through StudentAid.gov or via your loan servicer. Documentation such as income verification may be required.
Income-Contingent Repayment (ICR) Forgiveness
ICR limits payments to 20% of discretionary income or what you’d pay on a fixed 12-year plan, whichever is less. After 25 years of payments, the remaining loan balance may be forgiven.
Who Is Eligible?
Any borrower with eligible federal loans can enroll in ICR regardless of income or hardship status.
Eligible Loans
- Direct Subsidized and Unsubsidized Loans
- Direct PLUS Loans made to graduate students
- Direct Consolidation Loans
- Consolidated FFEL Stafford Loans
- Consolidated FFEL Loans made to parents
- Consolidated Parent PLUS Loans
- Consolidated Federal Perkins Loans
How to Apply
Apply via StudentAid.gov or contact your loan servicer for a paper application. Income and family size documentation may be required.
Federal Perkins Loan Cancellation and Discharge
This program offers partial or full forgiveness of Federal Perkins Loans for borrowers who work in certain public service occupations. Forgiveness is applied incrementally for each year of qualifying service.
Who Is Eligible?
Eligibility is based on your occupation. Qualifying roles include teachers, nurses, military personnel, law enforcement officers, and public defenders, among others.
Eligible Loans
- Federal Perkins Loans only
How to Apply
Borrowers should contact the school that issued the Perkins Loan or its loan servicer to request cancellation application forms and submit documentation of qualifying employment.
Occupation-Specific Loan Forgiveness Programs
If you don’t qualify under other programs, you may be eligible for student loan forgiveness specific to your profession, particularly in education or healthcare.
Teacher Loan Forgiveness
The Teacher Loan Forgiveness Program offers up to $17,500 in federal student loan forgiveness for highly qualified teachers who work full-time for five consecutive academic years in low-income schools or educational service agencies.
Who Is Eligible?
- Must be a highly qualified teacher, certified or licensed in your state.
- Must teach full-time for five consecutive academic years in a low-income elementary or secondary school or educational service agency.
- Must have taken out loans after October 1, 1998.
Eligible Loans
- Direct Subsidized and Unsubsidized Loans.
- Subsidized and Unsubsidized Federal Stafford Loans.
How to Apply
After completing the required five years of teaching service, submit the Teacher Loan Forgiveness Application to your loan servicer, along with certification from your school or agency.
Nurse Corps Loan Repayment Program
The Nurse Corps Loan Repayment Program repays up to 85% of unpaid nursing education debt for registered nurses, advanced practice registered nurses, and nurse faculty who serve full-time in high-need areas or at Critical Shortage Facilities.
Who Is Eligible?
- Must be a licensed registered nurse (RN), advanced practice registered nurse (APRN), or nurse faculty member.
- Must work full-time (at least 32 hours per week) at a public or private nonprofit Critical Shortage Facility or an accredited eligible school of nursing.
- Must be a U.S. citizen, U.S. national, or lawful permanent resident.
Eligible Loans
- Federal Direct Loans.
- Federal Stafford Loans.
- Grad PLUS Loans.
- Federal Consolidation Loans (excluding those that include Parent PLUS loans).
How to Apply
Applications are accepted annually through the HRSA’s Bureau of Health Workforce. The 2025 application cycle is currently open and will close on April 17, 2025. Awards are competitive and based on financial need and service commitment.
Please make sure you meet all eligibility requirements and follow the application deadlines. For the most accurate and detailed information, look at the official program websites linked above.
None of These Apply To You
If you aren’t eligible for any of the student loan forgiveness programs listed above, don’t worry—there are still options. One smart move could be refinancing your student loans. This can help reduce your interest rate, lower your monthly payments, or both.
If you’re having trouble making payments, another option is to extend the loan term. While this may increase the total interest paid over time, it can offer much-neded relief in the short term by reducing your monthly payment.
Platforms like Credible let you compare multiple lenders at once to find the best refinancing deal for your situation.
A variable rate student loan can be a smart move if interest rates are low and you plan to pay it off quickly. If your income is rising and you’re confident you can knock out the loan before rates climb, the potential savings might be worth the risk.
But if you’re not sure your income will increase soon—or you just prefer predictable monthly payments—a fixed-rate loan is the safer bet. It gives you stability, even if rates go up later.
To Sum It Up
Dealing with student loans is tough—but you’re not stuck. From forgiveness programs to smarter repayment strategies, there are real ways to take control and make progress starting today.
- Check your eligibility: PSLF, IDR plans, and career-based programs could wipe out part—or all—of your debt.
- Know your options: If forgiveness isn’t a fit, refinancing or extended repayment can offer relief.
- Stay organized: Keep track of payments, employment certifications, and deadlines to protect your progress.
- Use official tools: Visit StudentAid.gov often for updates and application access.
Student debt doesn’t have to hold you back. With the right info and a clear plan, you can reduce the stress—and start moving forward with confidence.
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Mark spent over 30 years as a senior finance executive in Private Banking, Asset Management and Alternative Investments. Mark holds a BS in Accounting from Brooklyn College, an MBA in Finance from Pace University as well as being sponsored to attend The Wharton School Executive Development Program.
