Student Loan Forgiveness May Be on Its Way After All
The United States Department of Education has announced borrowers should check their emails to learn if they may be eligible for the wide-scale loan cancellation. This move is part of the Biden-Harris administration’s efforts to work around the Supreme Court's previous ruling against Biden's original sweeping student loan forgiveness plan. Now, the proposed rule—which is still being finalized—aims to provide narrower, more targeted debt relief.
What this news means for you
Borrowers who may qualify for this relief should keep an eye out for official communications and be prepared to take any necessary steps to apply or confirm their eligibility.
In its email to borrowers, the department lists four categories of eligibility:
- Borrowers who owe more than they did at the start of repayment.
- Those who entered repayment on their undergraduate loans on or before July 1, 2005, or, if they have graduate loans, on or before July 1, 2000.
- People who are already eligible for student loan forgiveness under one of the government’s existing programs but just haven’t yet applied.
- Students from “low-financial value” programs.
In general, when it comes to more targeted eligibility, there are three main programs at play: Public Service Loan Forgiveness (PSLF), the Saving on a Valuable Education (SAVE) Plan, and income-driven repayment (IDR) plans. "Hopefully, millions will get their student loans forgiven under these programs," says Shaan Patel, CEO of Prep Expert.
According to Patel, there are strong indications that more and more loans will be forgiven, as well as expanded relief through means like "waiving interest, automatic forgiveness, specifically targeted assistance for those facing financial hardship," and more.
The final rule on this debt relief is expected to go out sometime in October. For now, the Department of Education says those who want to be included in the relief do not need to do anything. No application will be needed.
So, as the landscape of student loans and college financing continues to evolve, staying informed about new programs and opportunities is crucial. This potential debt relief for millions of borrowers marks a hopeful shift in addressing the student loan crisis. However, for incoming students, a proactive and comprehensive approach to financing their education remains essential.
Finding the best way to pay for college
For most incoming college students, the path to financing their education can be daunting. Scholarships and loans are often some of the only viable options, and the number of choices can be incredibly overwhelming. Patel breaks down the main two paths forward for prospective students: loans and merit-based aid.
When it comes to loans, Patel urges borrowers to regularly visit studentaid.gov, in order to stay on top of any updates to eligibility, deadlines, or new programs available to you.
Another tip from Patel is to negotiate your financial aid package—an option "many students and parents don't even realize is available to them." If your family's financial situation has changed since you originally applied months ago—from, say, job loss or medical expenses—then you should document these circumstances and send a formal appeal letter to your financial aid office. Patel stresses the importance of going in person or speaking to the office over the phone, if possible. Compared to the impersonal communication of an email, you'll be better poised to make your case and understand the timeline for getting a response. And like with any negotiation, if you have a better offer from another school, bring that up. The financial aid office may be able to match or approve upon that competing offer.
When it comes to scholarships and other types of merit-based aid, Patel's big tip is go local. "When I was a senior in high school, I applied to 100 scholarships," shares Patel. "I won 20, and 19 of those scholarships were local to my city and state." It makes sense: With national scholarships, your competition is stiff. With niche, local scholarships, you increase your odds tenfold. Do some in-depth research about scholarships available in your area. There could be a local business you've never heard of that has a program with money available to fund your way to school.
Patel shares one more underrated strategy for anyone short on college funds: Consider attending a junior community college for two years, and then transferring to a traditional four-year institution. You can save significant amount on tuition and fees, and "many community colleges have existing transfer agreements with four-year universities to ensure a seamless and cost-effective transition." Patel knows many students who have been able to transfer to top universities after essentially halving the cost of a four-year degree.
The takeaway
By exploring all available options, including federal aid and niche, local scholarships, students can make informed decisions that align with their educational goals and financial circumstances. Remember, the key is to start early and stay organized. Again: Regularly visit studentaid.gov to take advantage of the most up-to-date tools and information for debt relief.
Borrowers who are eager to learn if they might be eligible for student loan forgiveness should closely monitor their emails for official communications and be prepared to act promptly if needed, as the forgiveness process may require taking specific steps to apply or confirm eligibility. With the potential for student loan forgiveness through programs like Public Service Loan Forgiveness (PSLF), the Saving on a Valuable Education (SAVE) Plan, and income-driven repayment (IDR) plans, having access to money could significantly impact a student's financial situation.
