Federal student loan borrowers may be getting some relief soon, as President Biden outlines his official plan to cancel $10,000 in student loan debt per borrower.
Mr. Biden tweeted on Wednesday he would be keeping his “campaign promise” and will announce a plan to “give working and middle-class families breathing room” before the federal student loan payment moratorium ends in January 2023.
Unfortunately, this deal doesn’t apply to private student loan holders who received loans from a bank, credit union or other financial institution. However, there are still options for private borrowers to get some help – via a student loan refinance, for example. Check out a private lender to view your refinancing options.
What student loans are not eligible for forgiveness?
Private student loans, by definition, are private and are not eligible to be forgiven. These are loans the borrower owes to student loan providers and not the federal government. Mr. Biden’s announcement won’t change how these are repaid and borrowers should expect to continue to repay them as they have to date.
While theoretically possible that the government could pay private lenders individually and thus erase the debt borrowers have with those providers, this was not something that Mr. Biden announced, offered or even seriously suggested.
In short: If you have a student loan debt, in any amount, that’s owed to a private lender this news won’t be applicable to you.
Other relief options for private student loan borrowers
If the debt is significant and you’re having trouble paying it, however, you do have options.
Refinancing a private student loan has multiple advantages and it should be pursued immediately if the alternative is default. See what kind of student loan refinance options you qualify for and get relief today.
With a student loan refinance, you can potentially lower your interest rate and save money in the long run.
Who is eligible for forgiveness under Biden’s plan?
Under Mr. Biden’s student loan forgiveness plan, millions of borrowers earning less than $125,000 a year would receive $10,000 in forgiveness – and some low-income Americans who have received Pell Grants could get an additional $10,000.
It may not be the $50,000 some Democrats requested earlier this year, but it would still ease some of the burdens on a portion of the 43 million federal student loan borrowers who collectively owe more than $1.7 trillion.
Other federal student loan forgiveness plans
If you’re carrying more than $10,000 in federal student loan debt or you don’t qualify for Mr. Biden’s forgiveness plan, you may also want to research some other student loan forgiveness programs:
- Teacher Loan Forgiveness: For full-time teachers who have worked five complete and consecutive years in certain schools or services that serve low-income students.
- Public Service Loan Forgiveness (PSLF): For full-time government or non-profit workers who have made at least 10 years’ worth of payments (120 qualifying payments).
- Income-Driven Repayment (IDR) Plans: For those who repay loans under an income-specific repayment program (learn more).
- Military Service: For eligible members of the U.S. armed forces (learn more).
- AmeriCorps: For those who successfully finished an approved AmeriCorps program.
