The End of Student Loan Forgiveness: What You Need to Know

The End of Student Loan Forgiveness: What You Need to Know

For years, many college graduates have relied on the promise of student loan forgiveness to ease the burden of their student loan debt. However, recent changes in policy have put an end to this program, leaving many borrowers wondering what they need to do next.

In 2017, the Public Service Loan Forgiveness program, which allowed borrowers who worked in qualifying public service jobs to have their student loan debt forgiven after 10 years of making payments, came under scrutiny. The Department of Education announced that only about 1% of borrowers who applied for the program were approved for forgiveness, sparking outrage and leading to questions about the program’s effectiveness.

Then, in 2020, the CARES Act suspended federal student loan payments and interest accrual through September 30, 2021, providing relief to millions of borrowers during the COVID-19 pandemic. However, this relief is set to expire, and with the federal government no longer offering loan forgiveness, borrowers are left to figure out how to manage their student debt on their own.

So, what do borrowers need to know in light of the end of student loan forgiveness?

First, it’s important to understand that federal student loan forgiveness is no longer an option. This means that borrowers will need to repay their student loans in full, unless they are able to qualify for forgiveness through other means, such as through an income-driven repayment plan or by working in a qualifying public service job for the required number of years.

Second, borrowers should explore their options for income-driven repayment plans, which base monthly payments on a percentage of the borrower’s discretionary income. These plans can help make monthly payments more manageable, but it’s important to note that any remaining balance at the end of the repayment period will be forgiven, but the forgiven amount will be taxable as income.

Additionally, borrowers may want to consider refinancing their student loans with a private lender. Refinancing can potentially lower the interest rate on the loans, which could result in lower monthly payments and overall savings. However, it’s important to carefully consider the pros and cons of refinancing, as it may not be the best option for everyone.

Finally, it’s crucial for borrowers to stay informed about any changes in student loan policies and to make a plan for managing their student loan debt. This may involve creating a budget, seeking guidance from a financial advisor, or exploring other avenues for managing debt.

The end of student loan forgiveness has left many borrowers feeling uncertain about the future of their student loan debt. By understanding their options and developing a plan for repayment, borrowers can take proactive steps to manage their debt and work towards financial stability.