Student loan forgiveness has been in the news and on our minds. And for good reason.
If you plan to get a college degree, there’s a 50-50 shot you’ll be graduating with some debt — around $30,000 on average, according to a 2023 report by the College Board.
As education costs continue to rise, student debt in the U.S. has ballooned from $500 billion in 2006 to around $1.75 trillion today. This debt has prevented borrowers from moving forward with other financial plans: buying a car, buying a house, starting a business, or starting a family.
But a lot of student loan debt has been forgiven under President Joe Biden.
A recent CNN analysis noted that the Biden administration canceled nearly $144 billion in federal student loan debt — almost 10 percent of all outstanding student loan debt. And that’s only a fraction of the $430 billion Biden sought to forgive before the U.S. Supreme Court halted his efforts.
Students and parents legitimately wonder: If I take out student loans, will I have to pay them back?
The answer is: most likely yes.
While there are well-established loan forgiveness programs, most students will need to pay back what they borrow — and more money in the form of accrued interest. This may be disappointing to hear, but it’s important to know as you prepare financially for your education.
Curious about what kind of loan forgiveness you may be eligible for? We’ll discuss the cases in which student debt relief may be an option — and explain why you should exercise caution when factoring student loan forgiveness into your plans.
Loan Forgiveness 101
So what is student loan forgiveness? Pretty much what it sounds like. It’s when the federal government or a state government forgives all or part of the loans you took out to fund your education. In other words, you may not have to pay back all the money you originally owed. You may be given a break on some of the loan or interest payments that have built up over time.
Both the federal government and state governments offer various types of student loan forgiveness. State programs tend to be narrower, focusing on professions that are needed in the state and may not pay well, including social workers, health care professionals, or public defenders. This article is focused on the federal forgiveness programs that have been making the headlines, but you can research debt relief programs offered in your state.
Another thing to know: loan forgiveness programs are tightly targeted. The federal government, for example, will not forgive private or state loans. And while private lenders may offer temporary payment pauses or allow you to lower your monthly interest rate or payment amount for a brief period, they do not offer forgiveness.
Need to know more about about federal student loans? Read our guide on government-backed student loans.
The most common government program is the Federal Direct Loan Program. It offers subsidized loans to low-income students and unsubsidized loans to families with higher incomes. The difference between the two is when interest begins to accumulate. Subsidized loans don’t accrue interest until after you graduate, while unsubsidized loans begin accruing interest immediately. There is also the government-backed PLUS loan program for parents and graduate students who may need to borrow large sums of money to pay for college. The various types of loan forgiveness programs may forgive debt for certain loans and not others.
Is Loan Forgiveness an Option?
Upon taking office, President Biden pledged to lower student debt by expanding access to programs already on the books and developing new ones. So far, his policies seem to be working: since taking office, student debt accumulation has slowed, and, for the first time on record, decreased from 2022 to 2023. But Biden’s loan forgiveness programs are controversial. Today his efforts are still working their way through the courts.
In June 2023, the Supreme Court struck down Biden’s plan to cancel up to $20,000 in debt for qualified low and middle-income borrowers. Following the decision, his administration pledged to find alternative paths for student loan forgiveness. The Biden administration then announced a more modest set of actions that aims to expand debt relief using existing programs.
Whether these options will be available to you after you graduate from college is up in the air.
Politics Matter
While President Biden and the Democratic Party remain committed to loan forgiveness, former President Trump and the Republican Party have opposed these programs. Republicans and others have challenged debt relief in court, successfully shutting down programs that weren’t authorized by Congress.
It’s important to know that student loan forgiveness is an administrative power that a president can choose to embrace or ignore. Debt relief may be mandated by Congress, but it is the Secretary of Education that promotes and runs the federal loan forgiveness programs. For example, President Trump’s Education Secretary Betsy DeVos did little to help students apply for loan forgiveness. Few students knew these programs existed and a majority of the applicants that did apply were rejected. Advocates had to sue to get the Trump administration to do its job. Debt relief is controversial and tends to be tied up in the courts no matter who is in office.
Be sure to follow the political activity and litigation surrounding debt relief as you take out loans and plan for the future — especially now. Understand that loan forgiveness is never a sure thing.
Loan Forgiveness Programs
It is good to know what opportunities exist. If you already have debt, it may be possible to get some forgiven before the next election, making the most of President Biden’s current initiatives.
Here are the main programs available right now, along with perspective on how some of these programs have fared under presidents Biden and Trump.
Public Service Loan Forgiveness
The Public Service Loan Forgiveness program, or PSLF, offers qualifying government and nonprofit workers student loan forgiveness after a period of time. Those eligible — teachers, nurses, social workers, and similar professions — are entitled to have the balance of their debt forgiven after making 120 monthly payments as a public service worker. That’s a timeline of about ten years.
The Public Service Loan Forgiveness program was enacted by Congress in 2007, which means the first borrowers became eligible for forgiveness in 2017. President Trump’s Education Secretary Betsy DeVos was in charge of the program at the time. Some 94 percent of loan forgiveness applications were rejected under her watch.
The Biden Administration took the opposite approach. In just over three years, Biden’s Education Secretary Miguel Cardona raised the number of approvals from 7,000 under Trump to more than 942,000 today. Cardona’s team is actively seeking to identify and automatically approve all other eligible borrowers. However, the Education Department’s rules have yet to be finalized and it remains to be seen whether they will survive court challenges.
Teacher Loan Forgiveness
Similar to PSLF is Teacher Loan Forgiveness, a more targeted federal program that forgives up to $17,500 of student loan debt for qualifying educators. You must teach full time for five complete and consecutive academic years in a low-income elementary school, secondary school, or educational service agency to become eligible. You must also have a bachelor’s degree and a state certification as a teacher. This is one of the older and more established federal loan forgiveness programs.
Income-Driven Repayment
Another Congressionally-approved program is Income-Driven Repayment. If enrolled in one of the four plans, your required monthly payments will be based on how much money you make. Under the Biden Administration’s new SAVE plan, your bill will be $0 if your income is within 225 percent of the federal poverty line. Income-driven repayment plans have a repayment period of 20 to 25 years. After that, any remaining balance you haven’t paid off is forgiven.
The Biden Administration is working to automatically forgive the balances of all undergraduate borrowers who began paying back their loans more than 20 years ago. For those owing $12,000 or less, the forgiveness timeline is cut down to ten years. It would also cancel any interest accumulated by borrowers making less than $120,000 per year. Again, this will only happen if the rules, once they’re finalized and published, are upheld in court.
Borrower Defense
A fourth program the Biden Administration is looking to expand is Borrower Defense. It allows students who believe they were defrauded by their college to request loan forgiveness. The rule, enacted in 1994, made headlines in 2015 when the predatory for-profit institution Corinthian Colleges Inc. was shut down following legal challenges. In 2022, the Biden Administration canceled $5.8 billion in loans for the 560,000 remaining borrowers who attended Corinthian.
As with PSLF, President Trump’s Education Department rejected most Borrower Defense applications and rewrote the rule to make forgiveness requirements more strict. In 2021, the Biden Administration undid DeVos’s changes and as of April 2024 approved $22.5 billion in debt cancellations, compared to $600 million in all previous administrations combined.
The new proposal would identify and automatically cancel the debt of all borrowers who attended fraudulent colleges. It would also expand Borrower Defense loan discharge to “borrowers who attended institutions or programs that closed and failed to provide sufficient value.” Once again, this will happen only if the finalized rules survive litigation.
Total and Permanent Disability Discharge
The last major program the Biden Administration is seeking to strengthen is the Total and Permanent Disability Discharge. This program allows borrowers suffering from a severe disability to apply for loan forgiveness. Only about 200,000 applicants were approved under Trump. Since taking office, the Biden Administration has approved $14 billion in debt cancellation for over 548,000 borrowers and continues to identify eligible borrowers through automatic matches with the Social Security Administration and other actions.
The Biden Administration also announced that it will be developing a plan to relieve debt for those experiencing economic hardship. This includes those at risk of defaulting on their loans as well as those with high medical debt or child care expenses. The specifics of the plan are not yet published, and regardless of the details will likely face intense legal challenges, as the proposal is not attached to an existing program.
Who Gets Loan Forgiveness?
As you can see, only a limited number of situations qualify for student loan forgiveness. Many of these — fraud, disability, economic hardship — are situations you’d rather not find yourself in.
Many, if not all, of Biden’s new rules will be challenged in court once they’re finalized and published. Even if the courts uphold some or all of the new rules, they may not be applied as generously under a different administration.
This isn’t to say that you should write off the idea of student loan forgiveness altogether. If you’re committed to a life of public service, PSLF’s ten-year forgiveness plan is an exciting prospect. Similarly, if you’re considering a lower-paying private sector career, having your debts forgiven after 20 years may help you stay the course.
Just be careful, and make sure you have a Plan B if the debt relief landscape changes. Otherwise, you may not be able to forgive yourself!
EXTRA CREDIT
Read more about loans and your loan forgiveness opportunities.
Federal Student Aid: Student Loan Forgiveness
Federal Student Aid: Federal Student Loans
Austin Tannenbaum is editorial manager of the fact-checking startup Gigafact. He got an undergrad degree in environmental advocacy at the University of Redlands and is currently at The New School for Social Research getting a master’s in creative publishing and critical journalism. He is passionate about helping college students graduate with less debt than he has.