Laurel Road: 2023 Student Loan Forgiveness Options

Federal student loan borrowers who could qualify for student loan forgiveness have several paths to consider.

Federal student loan forgiveness programs can provide much-needed financial relief for those with student loan debt. Typically, these programs involve manageable repayment plans as well as having the remaining balance of a borrower’s loan(s) forgiven after a certain time period and number of payments. While the Supreme Court decides the fate of President Biden’s student debt cancellation plan, there are multiple existing forgiveness programs available to federal borrowers, including a program specifically for those in nonprofit or public service jobs.

Keep reading to learn more about the student loan forgiveness options available in 2023:

Public Service Loan Forgiveness (PSLF)

PSLF is a government program that could allow students to have their student loan debt forgiven after 10 years of qualifying payments.

To receive PSLF, federal student loan borrowers must work in public service, and make 120 monthly payments under an Income-Driven Repayment (IDR) plan.

Public service jobs can include working for the government at a local, state, federal, or tribal level or at a qualifying nonprofit organization.

Income-Driven Repayment (IDR)

IDR plans allow student loan borrowers to stabilize their monthly payments based on their income level.

These plans can help borrowers manage their student loan payments if their salary makes repayment through the 10-year Standard Plan or other payment plans more challenging. With IDR, borrowers may be eligible for loan forgiveness after 20 to 25 years, depending on how much they owe when applying for forgiveness.

There are four types of IDR plans, including Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), Pay As You Earn (PAYE), and Revised Pay As You Earn (REPAYE):

IBR 

IBR allows borrowers to cap their monthly payments at 10 to 15% (depending on the age of the loan) of their discretionary income. Discretionary income is determined as the difference between 150% of the poverty guideline for the borrower’s location and family size and their Adjusted Gross Income (AGI).

ICR 

ICR caps monthly payments at 20% of a borrower’s discretionary income (calculated based on 100% of the poverty guideline rather than 150%) and offers an extended payment period of up to 25 years.

The main difference between ICR and IBR is that ICR does not require borrowers to have low income to qualify—anyone can enroll in this program.

PAYE 

PAYE caps monthly payments at 10% of the borrower’s discretionary income and offers an extended repayment period of up to 20 years before borrowers must pay off the remaining balance. This is one of the most popular plans due to its lower payment amount and shorter repayment period compared with other available plans.

REPAYE 

REPAYE offers similar benefits as PAYE, but graduate school borrowers are also eligible for this program—the program caps monthly payments at 10% of discretionary income and extends repayment periods up to 20 years for undergraduate borrowers or 25 years for graduate borrowers.

The Changing Landscape

In April 2022, the US Department of Education (ED) announced a plan to bring borrowers closer to forgiveness through an IDR account adjustment.

As part of this initiative, ED will conduct a one-time revision which could give borrowers a higher count for their IDR-qualifying payments, making them eligible for forgiveness faster.

Those who have Federal Family Education Loans (FFEL) or a Direct Loan could qualify.

However, borrowers who have loans that don’t qualify—such as those with commercially managed Federal Family Education Loans (FFEL), Perkins, or Health Education Assistance Loan (HEAL) loans could apply for a Direct Consolidation Loan by the end of 2023, to get the full benefits of the account adjustment.

Teacher Loan Forgiveness 

Teacher Loan Forgiveness is a form of debt reimbursement designed to assist teachers who are considered highly qualified.

This program allows relief of up to $17,500 in student loan forgiveness for qualified loans if the applicant has worked five consecutive years as a full-time highly qualified teacher at a Title I school.

Highly qualified teachers have:

• Earned a bachelor’s degree or higher
• Received full state certification as a teacher
• Not had certification requirements waived on an emergency, temporary, or provisional basis

Bottom Line

Borrowers may avoid economic hardship by researching and understanding what federal programs could help ease the burden of student loan debt.

For those uncertain about getting their student loans forgiven, consider speaking with a professional for advice. Speaking with other borrowers and using resources such as government websites and student loan repayment calculators online may also help.

Ultimately, student loan forgiveness could allow many borrowers to improve their financial situation.