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What government programs?

Document with title student loan forgiveness.
Vitalii Vodolazskyi / Shutterstock

The government currently has two forgiveness programs to help Americans shake off their federal student loans faster: income-driven repayment and Public Service Loan Forgiveness.

Income-driven repayment plans are designed to meet the needs of lower-income borrowers; how much you pay on your student loans each month is determined by your earnings. Once you’ve been making your payments for at least 20 or 25 years, depending on your specific income-driven plan, the rest of your debt is forgiven.

As for the Public Service Loan Forgiveness program, it was created to help public service employees at every level of government and qualified employees at nonprofits work off their federal student loans. Following 10 years of faithful monthly payments, any remaining debt is wiped clean.

Here's how borrowers in both programs can use the current suspension of student loans to their advantage: The government has decided to count the months of frozen payments as payment months for people in those programs.

If you're in that group, you're getting credit for the payments you haven't been making — and are moving closer to having portions of your student loan balances eliminated.

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What if you’re not in one of those programs?

President Joe Biden speaks at a podium wearing a mask
Oliver Contreras/UPI/Shutterstock

If you're not participating in one of the federal student loan forgiveness programs, you'll have to patiently hold on for relief. Democrats are toying with a couple of options to provide permanent help for the country’s 42 million student loan borrowers.

On the campaign trail last year, Biden proposed wiping out $10,000 worth of debt per person.

But as pandemic rages on, leaders in the Democratic party are pushing to do even more for Americans struggling with student loan debt. Senate Majority Leader Chuck Schumer and Massachusetts Sen. Elizabeth Warren are urging Biden to issue an executive order pardoning $50,000 worth of debt for each borrower.

The president doesn’t appear to be keen on wiping out student loan debt by executive order — which would mean going around Congress — but White House Press Secretary Jen Psaki tweeted on Feb. 4 that the president "continues to support the canceling of student debt to bring relief to students and families."

Psaki added: "Our team is reviewing whether there are any steps he can take through executive action and he would welcome the opportunity to sign a bill sent to him by Congress."

Other loan relief options

Woman holding head in hands, looking down at pile of bills on kitchen table
Twin Design / Shutterstock

If you need relief from your student loan debt right now, you may want to explore refinancing your loan. It’s quick, painless and could save you thousands of dollars in interest.

As for handling the bulk of your balance, you can always also free up some money in your budget to put more toward paying down your loans. There are plenty of creative ways to cut your spending or increase your income, including:

  • Pay less for the essentials. Living on a budget doesn’t have to feel like a punishment. Download a free browser extension that automatically finds you the best deals and coupons every time you shop online.

  • Sign up for free money. Yes, it’s really as simple as that. Try out a fun rewards program that gives you gift cards and cash for the things you already do online every day, like shopping, watching videos and searching the web.

  • Switch your car insurance. Staying home might work in your favor with your auto insurer. As people are driving way less through the pandemic, some car insurance companies have been giving customers price breaks. Is yours unwilling to budge? Shop around for a better policy and make a change.

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Sigrid Forberg Associate Editor

Sigrid’s is Moneywise.com's associate editor, and she has also worked as a reporter and staff writer on the Moneywise team.


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